UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE
(RULE 14a-101)
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant ☒
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other than the Registrant ☐
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to §240.14a-12
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VERIZON
COMMUNICATIONS INC.
(Name of
Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy
Statement, if other than the Registrant)
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No fee required.
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of
securities to which transaction applies:
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(3) Per unit price or
other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
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aggregate value of transaction:
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Our innovations are
building a connected
world a better future for everyone.
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Time and date
Thursday, May 4, 2017
8:30 a.m., local time
Place
Dallas Marriott Las Colinas
223 West Las Colinas Boulevard
Irving, Texas 75039
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How to vote
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Online
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Phone
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Mail
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In person
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If you are a registered shareholder, you may vote online at
www.envisionreports.com/vz
, by telephone or by mailing a proxy card.
You may also vote in person at the annual meeting. If you hold your shares through a bank, broker or other institution, you will receive a voting instruction form
that explains the various ways you can vote. We encourage you to vote your shares as soon as possible.
Important Notice Regarding Availability of Proxy
Materials for Verizons Shareholder Meeting to be
Held on May 4, 2017
The 2017 Proxy Statement and 2016 Annual Report are available at
www.edocumentview.com/vz
.
Verizon Communications Inc.
1095 Avenue of the Americas
New York, New York 10036
March 20, 2017
By Order of the Board of Directors,
William L. Horton, Jr.
Senior Vice President, Deputy General Counsel and Corporate Secretary
Items of business
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Elect the 12 Directors identified in the accompanying proxy statement
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Ratify the appointment of the independent registered public accounting firm
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Approve, on an advisory basis, Verizons executive compensation
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Vote, on an advisory basis, on the frequency of future advisory votes related to Verizons executive compensation
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Approve Verizons 2017 Long-Term Incentive Plan
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Act on the shareholder proposals described in the proxy statement that are properly presented at the meeting
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Consider any other business that is properly brought before the meeting
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Table of Contents
Proxy Summary
Meeting information
Date and time
May 4, 2017, 8:30 a.m., local time
Place
Dallas Marriott Las Colinas
223 West Las Colinas Boulevard, Irving, Texas 75039
Record Date
Shareholders as of March 6,
2017 may vote
Admission and voting
Please
see Additional Information about the Annual Meeting beginning on page 89
This summary highlights information contained elsewhere in this proxy statement. This summary does not
contain all of the information you should consider, so you should read the entire proxy statement before voting. For more complete information regarding Verizons 2016 performance, please review Verizons 2016 Annual Report.
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Verizon
2017 Proxy
Statement
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i
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Proxy Summary
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Executive compensation program highlights
Executive compensation program highlights
Verizons executive compensation program reflects our commitment to industry-leading compensation and governance practices. The program is discussed in detail in
the Compensation Discussion and Analysis beginning on page 28.
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Objectives
Align executives and shareholders interests
Attract, retain and motivate high-performing executives
Governance
Semi-annual shareholder outreach
Shareholder approval policy for severance benefits
Significant executive share ownership requirements
Clawback policy
Anti-hedging policy
Say-on-pay advisory vote every year
Independent compensation consultant
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Pay for performance
Extensive focus on variable, incentive-based pay
No defined benefit pension or supplemental
retirement benefits
No executive employment agreements
No cash severance benefits for the CEO
No tax gross-ups
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2016 Compensation
The summary below shows the 2016 compensation for each of our named executive officers, as required to be reported in the Summary compensation table
pursuant to U.S. Securities and Exchange Commission (SEC) rules. Please see the notes accompanying the Summary compensation table on page 49 for more information.
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Name and Principal Position
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Salary
($)
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Bonus
($)
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Stock
Awards
($)
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Option
Awards
($)
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Non-Equity
Incentive Plan
Compensation
($)
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Change in Pension Value
and Nonqualified Deferred
Compensation Earnings
($)
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All Other
Compensation
($)
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Total
($)
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Lowell C. McAdam
Chairman and
Chief Executive Officer
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1,600,000
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0
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12,000,077
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0
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3,200,000
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233,155
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641,347
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17,674,579
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Matthew D. Ellis*
Executive Vice
President
and Chief Financial Officer
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488,462
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0
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1,708,468
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0
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410,000
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1,291
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89,138
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2,697,359
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John G. Stratton
Executive Vice
President and
President of Operations
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896,154
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0
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4,725,072
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0
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1,080,000
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101,959
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237,424
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7,040,609
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Marni M. Walden
Executive Vice
President and
President of Product Innovation
and New Businesses
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896,154
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0
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4,500,061
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0
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1,080,000
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55,034
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216,340
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6,747,589
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Marc C. Reed
Executive Vice President
and
Chief Administrative Officer
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792,307
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0
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4,000,094
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0
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960,000
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196,023
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224,745
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6,173,169
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Francis J. Shammo*
Former Executive
Vice President
and Chief Financial Officer
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921,154
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0
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4,856,306
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0
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1,110,000
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82,482
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235,653
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7,205,595
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*
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Mr. Ellis became Executive Vice President and Chief Financial Officer on November 1, 2016, when Mr. Shammo stepped down from that position. Mr. Shammo retired on December 31, 2016 after a long and distinguished
career with Verizon.
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ii
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Verizon
2017 Proxy Statement
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Proxy
Summary
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Agenda and voting recommendations
Agenda and voting recommendations
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Item 1
Election of Directors
The Board of Directors recommends that you vote for the election of these Director candidates.
Shareholders are being asked to elect 12 Directors. Verizons Directors are elected for a term of one year by a majority of the votes cast in an uncontested
election. Additional information about the Director candidates and their respective qualifications begins on page 7.
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Director
Since
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Committee Memberships*
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Name
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Age*
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Primary Occupation
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Independent
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Audit
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CGPC
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Finance
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HRC
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Shellye L.
Archambeau
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54
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2013
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Chief Executive Officer,
MetricStream, Inc.
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FE
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Mark T. Bertolini
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60
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2015
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Chairman and Chief Executive Officer,
Aetna Inc.
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Richard L. Carrión
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64
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1997
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Chairman and Chief Executive Officer,
Popular, Inc.
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CHAIR
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Melanie L. Healey
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55
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2011
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Former Group President of
The
Procter & Gamble Company
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M. Frances Keeth
(Lead Director)
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70
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2006
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Retired Executive Vice President,
Royal Dutch Shell plc
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FE
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CHAIR
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Karl-Ludwig Kley
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65
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2015
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Former Chairman of the Executive Board
and Chief Executive Officer, Merck KGaA
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Lowell C. McAdam
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62
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2011
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Chairman and Chief Executive Officer,
Verizon Communications Inc.
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Clarence Otis, Jr.
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60
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2006
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Former Chairman and Chief Executive
Officer, Darden Restaurants, Inc.
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FE
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CHAIR
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Rodney E. Slater
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62
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2010
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Partner, Squire Patton Boggs LLP
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Kathryn A. Tesija
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54
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2012
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Former Executive Vice President and Chief
Merchandising and Supply Chain Officer,
Target Corporation
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Gregory D. Wasson
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58
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2013
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Former President and Chief Executive
Officer, Walgreens Boots Alliance, Inc.
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FE
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Gregory G. Weaver
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65
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2015
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Former Chairman and Chief Executive
Officer, Deloitte & Touche LLP
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CHAIR
FE
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* Ages and committee memberships are as of March 3, 2017
CGPC
: Corporate Governance and Policy Committee
HRC
: Human Resources Committee
FE
: Audit Committee
Financial Expert
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Verizon
2017 Proxy
Statement
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iii
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Proxy Summary
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Agenda and voting recommendations
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Item 2
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Ratification of auditors
The Board of Directors recommends that you vote for ratification.
We are asking shareholders to ratify the Audit Committees appointment of Ernst & Young LLP
as Verizons independent registered public accounting
firm for 2017. Information on fees paid to
Ernst & Young in 2016 and 2015 appears on page 25.
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Item 3
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Advisory vote to approve executive compensation
The Board of Directors recommends that you vote for this proposal.
We are asking shareholders to approve, on an advisory basis, the compensation of our named
executive officers as described in the Compensation Discussion and Analysis and Compensation Tables beginning on page 28.
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Item 4
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Advisory vote on the frequency of future advisory votes to
approve executive compensation
The Board of Directors recommends that you vote for conducting future advisory votes on executive compensation every year.
We are asking shareholders to vote on whether future advisory votes on executive compensation
should occur every year, every two years or every three years, as described on page 65.
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Item 5
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Approval of Verizons 2017 Long-Term Incentive Plan
The Board of Directors recommends that you vote for
this proposal.
We are asking shareholders to approve Verizons 2017 Long-Term
Incentive Plan, as described beginning on page 66.
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Items
6-11
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Shareholder proposals
The Board of Directors recommends that you vote against each of the shareholder proposals.
In accordance with SEC rules, we have included in this proxy statement six proposals submitted by
shareholders for consideration. The proposals can be found beginning on page 78.
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iv
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Verizon
2017 Proxy Statement
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Proxy Statement
We are mailing this proxy statement to our shareholders beginning on March 20, 2017. It is also available online at
www.edocumentview.com/vz
or, if you are
a registered holder, at
www.envisionreports.com/vz
. Our Board of Directors is soliciting proxies in connection with the 2017 Annual Meeting of Shareholders and encourages you to read this proxy statement and vote your shares promptly.
Governance
Commitment to good governance
Our Board of
Directors believes that high standards of corporate governance increase value for Verizons shareholders and enhance our reputation. All of our Directors stand for election each year, and 11 of our 12 Directors standing for
re-election
this year are independent. Our rigorous Director nomination process identifies candidates with the time, skills and experience to contribute to Verizon and to engage with management about all aspects of
our business. Collectively, our Board embodies a range of viewpoints, backgrounds and expertise because our Board believes that diversity is an important attribute of a well-functioning board.
The Board conducts its oversight responsibilities through four standing committees: Audit, Corporate Governance and Policy, Finance, and Human Resources. Each committee
has a written charter that defines its specific responsibilities. The committees are discussed beginning on page 16.
The Corporate Governance and Policy Committee
ensures that the membership, structure, policies and practices of our Board and its committees promote the effective exercise of the Boards role in the governance of Verizon. In addition, our Corporate Governance Guidelines provide a framework
for the Boards operation and address key governance practices. The Corporate Governance and Policy Committee monitors best practices and developments in corporate governance, considers the views of Verizons shareholders, and periodically
recommends changes to the Boards policies and practices, including the Guidelines.
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Where to find more information on governance at Verizon
You can find Verizons Corporate Governance Guidelines, Code of Conduct and other corporate
governance materials, including Verizons certificate of incorporation, bylaws, committee charters and policies, on the Corporate Governance section of our website at
www.verizon.com/about/investors
. You can request copies of these
materials from the Assistant Corporate Secretary at the address given under Contacting Verizon.
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Verizon
2017 Proxy
Statement
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1
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Proxy Statement
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Business conduct and ethics
Business conduct and ethics
We are committed to operating with the highest level of integrity, responsibility and accountability. To that end, we have adopted a Code of Conduct that applies to all
employees, including the CEO, the Chief Financial Officer and the Controller. The Code of Conduct describes each employees responsibility to conduct business with the highest ethical standards and provides guidance about preventing, reporting
and remediating potential compliance violations in key areas. Directors are expected to act in the spirit of the Code of Conduct, and to comply with the specific ethical provisions of the Corporate Governance Guidelines. Our Board is strongly
predisposed not to waive any of the business conduct and ethics provisions applicable to Directors or executive officers. In the unlikely event of a waiver, we will promptly disclose the Boards action on our website.
Related person transactions
The Board has adopted
the Related Person Transaction Policy that is included in the Guidelines. The Corporate Governance and Policy Committee reviews transactions between Verizon and any of our Directors or executive officers or members of their immediate families to
determine if any participants have a material interest in the transaction. If the Committee determines that a material interest exists, based on the facts and circumstances of each case, the Committee may approve, disapprove, ratify or cancel the
transaction or recommend another course of action. Any Committee members who are involved in a transaction under review do not participate in the Committees deliberations.
From time to time Verizon has employees who are related to our executive officers or Directors. Lowell McAdam, Chairman and CEO, has a child who is employed by a
Verizon subsidiary and earned approximately $133,367 in 2016. Francis Shammo, former Executive Vice President and Chief Financial Officer, has an
in-law
who is employed by a Verizon subsidiary and earned
approximately $392,305 in 2016. John Stratton, Executive Vice President and President of Operations, has a child who is employed by a Verizon subsidiary and earned approximately $191,615 in 2016, and an
in-law
who is employed by a Verizon subsidiary and earned approximately $180,820 in 2016. In each case, the amount of compensation earned was comparable to that of other employees in similar positions. These employees also participate in Verizons
welfare and benefit plans that are made available to all employees.
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2
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Verizon
2017 Proxy Statement
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Proxy
Statement
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Key corporate governance features
Key corporate governance features
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Shareholder rights
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Majority voting in Director elections
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Verizons bylaws provide for the election of Directors by a majority of the votes cast in
an uncontested election. This provision can only be changed by a majority vote of the shareholders.
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Call a special
meeting
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Any shareholder owning at least 10% (or any group of shareholders owning at least 25%) of Verizons
outstanding common stock may call a special meeting of shareholders. Our bylaws include requirements relating to special meetings.
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Proxy access
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Any shareholder (or any group of up to 20 shareholders) owning at least 3% of Verizons outstanding
common stock for at least three years may include a specified number of director nominees in our proxy materials for the annual meeting of shareholders. Our bylaws specify qualifying stock ownership, the number of permitted nominees, and other
requirements relating to proxy access.
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Approve poison pill
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Verizon does not have a shareholder rights plan, commonly referred to as a poison pill. Any
shareholder rights plan adopted by our Board must be approved by shareholders within one year and then
re-approved
every three years.
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Ratify executive severance
agreements
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Shareholders must ratify any employment or severance agreement with an executive officer that provides for severance benefits exceeding 2.99 times the
sum of the executives base salary plus
non-equity
incentive plan payment. This policy is described on page 47.
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Board governance
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Director
independence
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All of our
non-employee
Directors are independent, and the standards
that our Board uses to assess independence are more stringent than those of the New York Stock Exchange (NYSE) or The Nasdaq Stock Market (Nasdaq). For more information about the independence of the
non-employee
Directors, see Independence on page 6.
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Board leadership
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Currently, the CEO serves as Chairman of the Board, in consultation with the Lead Director. You can read about
the respective roles and responsibilities of the Chairman and the Lead Director, and why our Board believes Verizons shareholders are best served by this leadership structure, under Board leadership on page 14.
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Limits on board
service
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To ensure that our Directors have sufficient time to devote to their responsibilities on Verizons Board,
our Corporate Governance Guidelines provide that Directors with full-time roles in
for-profit
businesses may not serve on more than three public company boards, and other Directors may not serve on more than
four public company boards. Members of our Audit Committee may not serve on more than two other audit committees.
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Stock ownership
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Within three years of their election, Directors must hold Verizon stock with a value equal to three times the
cash component of the annual Board retainer. Shares held in any deferral plan are included when calculating the number of shares held.
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Director retirement
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Directors must retire from the Board the day before the annual meeting of shareholders that follows their 72nd birthday. The size of the Board will be
reduced by one for each such retirement.
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Verizon
2017 Proxy
Statement
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3
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Item 1: Election of Directors
Election process
Verizons Directors are
elected annually for a term of one year. We believe annual elections are consistent with good corporate governance because they foster director accountability and increase shareholder confidence. Verizons bylaws require Directors to be elected
by a majority of the votes cast in an uncontested election.
Director nominations
The Corporate Governance and Policy Committee considers and recommends candidates for our Board. The Committee reviews all nominations submitted to Verizon, including
individuals recommended by shareholders, Directors or members of management. The Committee also retains executive search firms from time to time to help identify and evaluate potential candidates.
Any shareholder who wishes to recommend a Director candidate to the Committee for its consideration should write to the Corporate Secretary at the address given under
Contacting Verizon. A recommendation for a Director candidate should include the candidates name, biographical data and a description of the candidates qualifications in light of the requirements described below. If we make
any material changes to the Committees procedure for considering and nominating candidates, we will file a report with the SEC and post the information on the Corporate Governance section of our website at
www.verizon.com/about/investors
.
The Committee specifically reviews the qualifications of each candidate for election or
re-election.
For incumbent Directors, this review includes the Directors understanding of Verizons businesses and the environment within which Verizon operates, attendance and participation at
meetings, and independence. After the Committee evaluates all candidates for Director, it presents its recommendation to the Board. The Committee also discusses with the Board any candidates who were considered by the Committee but not
recommended for election or
re-election.
Before they are nominated, each candidate for election and each incumbent Director
standing for
re-election
must consent to stand for election or
re-election
and provide certain representations required under Verizons bylaws. Each candidate who
is standing for election must also submit an irrevocable resignation, which will only become effective if (i) our Board or any Committee determines that any of the required representations were untrue in any respect or (ii) the candidate
does not receive a majority of the votes cast at the annual meeting of shareholders and the independent members of our Board decide to accept the resignation. Any decision about a resignation following an incumbent Directors failure to obtain
a majority of the votes cast will be disclosed within 90 days after the election results are certified.
Shareholders wishing to nominate a Director should follow
the procedures set forth in Verizons bylaws and described on page 94.
Director criteria, qualifications and experience
To be eligible for consideration, any proposed candidate must:
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Be ethical
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Have proven judgment and competence
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Have professional skills and experience in dealing with a large, multi-faceted organization or in dealing with complex problems that complement the background and experience already represented on our Board and that
meet Verizons needs
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Have demonstrated the ability to act independently and be willing to represent the interests of all shareholders and not just those of a particular philosophy or constituency
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Be willing and able to devote sufficient time to fulfill responsibilities to Verizon and our shareholders
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4
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Verizon
2017 Proxy Statement
|
Item 1: Election of
Directors
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Director criteria, qualifications and experience
Our Boards commitment to refreshment and succession planning is at the core of its ability to maintain
independence of thought and action. Key factors the Committee considers when selecting Directors and refreshing the Board include:
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Diversity
The Committee recognizes that a diverse set of viewpoints and practical experiences enhances the effectiveness of our Board. In evaluating candidates, the Committee
considers how a candidates particular background, experience, qualifications, attributes and skills may complement, supplement or duplicate those of other prospective candidates.
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Experience
The Committee strives to maintain a Board with a wide range of leadership experience and skills relevant to Verizons strategic vision.
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Age and tenure
Under the Corporate Governance Guidelines, Directors must retire from the Board the day before the annual meeting of shareholders that follows their 72nd
birthday. The Committee also considers the tenure of each incumbent Director and the average tenure of the Board in an effort to maintain a Board that balances the fresh perspective and ideas of newer Directors with the deep insight into the Company
that longer tenured Directors have developed.
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Board size
Verizons Board currently has 12 members. The Committee periodically evaluates whether a larger or smaller board would be preferable, depending on the
Boards needs and the availability of qualified candidates.
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Board dynamics
The Committee considers each Director candidates individual contribution or potential contribution to the Board as a whole and strives to maintain one
hundred percent active and collaborative participation.
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Verizon
2017 Proxy
Statement
|
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5
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Item 1: Election of
Directors
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Independence
Independence
Verizons Corporate Governance Guidelines establish standards for evaluating Director independence and require that a substantial majority of the Directors be
independent. The Board determines the independence of each Director under NYSE and Nasdaq governance standards, as well as the more stringent standards included in the Guidelines. These standards identify the types of relationships that, if
material, could impair independence, and fix monetary thresholds at which the relationships are considered to be material. The Guidelines are available on the Corporate Governance section of our website at
www.verizon.com/about/investors
. The
Corporate Governance and Policy Committee conducts an annual review of any relevant business relationships that each Director may have with Verizon and reports its findings to the full Board. Based on the Committees recommendation, the Board
has determined that all of the incumbent
non-employee
Directors who are standing for election are independent: Shellye Archambeau, Mark Bertolini, Richard Carrión, Melanie Healey, M. Frances Keeth,
Karl-Ludwig Kley, Clarence Otis, Jr., Rodney Slater, Kathryn Tesija, Gregory Wasson and Gregory Weaver. The Board also determined that Donald Nicolaisen, who resigned from the Board on December 31, 2016, was independent.
The employers or former employers of Ms. Archambeau, Mr. Bertolini, Mr. Carrión, Dr. Kley, Mr. Slater and Ms. Tesija all made
payments to Verizon for telecommunications services and solutions during 2016. In addition, Verizon made payments to Mr. Bertolinis employer under an administrative services contract for employee healthcare benefits. Verizon also made
payments to Ms. Tesijas former employer in connection with sales of Verizons products and services at that companys stores, and Verizon received payments from that company for cybersecurity services. Applying the independence
standards above, the Board considered all of the foregoing payments and determined that these general business transactions and relationships are not material and did not impair the ability of the applicable Directors to act independently.
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6
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Verizon
2017 Proxy Statement
|
Item 1: Election of
Directors
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Nominees for election
Nominees for election
Our Board has nominated the 12 candidates below for election as Directors, all of whom currently serve as Directors of Verizon. After completing the evaluation process
described above, the Corporate Governance and Policy Committee and our Board concluded that each of the incumbent Directors should be nominated for
re-election.
We describe their respective experience,
qualifications, attributes and skills below. The Committee and the Board assessed these factors in light of Verizons strategy and businesses, which provide a broad array of communications, information and entertainment products and services to
individuals, businesses, governments and wholesale customers in the United States and around the world.
Each candidate has consented to stand for election, and we
do not anticipate that any candidate will be unavailable to serve. If any candidate were to become unavailable before the election, the proxy committee could vote the shares it represents for a substitute named by the Board.
Each candidate has submitted an irrevocable, conditional letter of resignation that our Board will consider if that candidate fails to receive a majority of the votes
cast.
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Our Board of Directors recommends that you vote
for
each of the following candidates.
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Director since
2013
Age
54
Independent
Committees
Audit
Corporate Governance
and Policy
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Shellye L. Archambeau
Ms.
Archambeau
is Chief Executive Officer of MetricStream, Inc., a
leading provider of governance, risk, compliance and quality management solutions to corporations across diverse industries. Prior to joining MetricStream in 2002, Ms. Archambeau served as Chief Marketing Officer and Executive Vice President of
Sales for Loudcloud, Inc., Chief Marketing Officer of NorthPoint Communications, and President of Blockbuster Inc.s
e-commerce
division. Before she joined Blockbuster, she held domestic and
international executive positions during a
15-year
career at IBM. Ms. Archambeau has served on the board of Nordstrom, Inc. since 2015 and, in the past five years, she has served on the board of Arbitron,
Inc.
Qualifications:
Ms. Archambeau provides our Board with valuable knowledge of
technology,
e-commerce,
digital media and communications platforms. Her experiences in the Silicon Valley emerging company community, as well as her prior experience at IBM, provide her with global
perspectives on developing and marketing emerging technology applications and solutions.
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Verizon
2017 Proxy
Statement
|
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7
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Item 1: Election of
Directors
|
Nominees for election
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Director since
2015
Age
60
Independent
Committee
Finance
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Mark T. Bertolini
Mr.
Bertolini
is Chairman and Chief Executive Officer of Aetna Inc., a Fortune 100 diversified healthcare benefits company. Prior to assuming
the role of Aetnas CEO in 2010 and Chairman in 2011, Mr. Bertolini served as President from 2007, responsible for all of Aetnas businesses and operations across the companys range of healthcare products and related services.
He also served as Executive Vice President and head of Aetnas regional businesses. Mr. Bertolini joined Aetna in 2003 as head of Aetnas Specialty Products after holding executive positions at Cigna, NYLCare Health Plans and
SelectCare, Inc.
Qualifications:
Mr. Bertolinis experience at a large,
multinational corporation provides our Board with valuable operational and management expertise, as well as critical perspective on strategic planning. His role as Chairman and CEO of Aetna provides our Board with additional insights into the
healthcare industry.
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Director since
1997
Age
64
Independent
Committees
Corporate Governance
and Policy
Finance (Chair)
Human Resources
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Richard L. Carrión
Mr.
Carrión
has served for over 20 years as Chairman and Chief
Executive Officer of Popular, Inc., a diversified bank holding company. He served as a director of the Federal Reserve Bank of New York a government-organized financial and monetary policy organization from 2008 to 2015. He also served
as a director of NYNEX Corporation, one of Verizons predecessor companies, from 1995 to 1997.
Qualifications:
Mr. Carrión provides our Board with financial, operational and strategic expertise developed during his long tenure as Chairman and
CEO of Popular, Inc. This experience, combined with his board service at the Federal Reserve Bank of New York, also provides our Board with deep risk management expertise.
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8
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Verizon
2017 Proxy Statement
|
Item 1: Election of
Directors
|
Nominees for election
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Director since
2011
Age
55
Independent
Committees
Finance
Human Resources
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Melanie L. Healey
Ms.
Healey
was Group President of The Procter & Gamble Company, one of the leading providers of branded consumer packaged goods, from
2007 to 2015. During her tenure at Procter & Gamble beginning in 1990, Ms. Healey held a number of other positions of responsibility, including Group President and advisor to the Chairman and CEO, Group President of North America and
Group President for the Global Feminine and Health Care Sector. Ms. Healey has served as a director of PPG Industries, Inc. since July 2016 and Target Corporation since 2015.
Qualifications:
Ms. Healey provides our Board with valuable strategic, branding,
distribution and operating experience on a global scale obtained over her
32-year
career in the consumer goods industry. Her deep experience in marketing and operations, including her 18 years outside the
United States, provides our Board with strategic and operational leadership and critical insights into brand building and consumer marketing trends globally.
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Director since
2006
Age
70
Independent
Committees
Audit
Corporate Governance
and Policy (Chair)
Finance
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M. Frances Keeth (Lead Director)
Ms.
Keeth
was Executive Vice President of Royal Dutch Shell plc, a
global energy company, from 2005 to 2006, and was President and Chief Executive Officer of Shell Chemicals LP from 2001 to 2006. During her long tenure at Royal Dutch Shell, Ms. Keeth served in a number of other positions of responsibility,
including Executive Vice President, Finance and Business Systems, and Executive Vice President, Customer Fulfillment and Product Business Units. Before holding these positions, Ms. Keeth was controller and principal accounting officer of
Mobil Corporation. Ms. Keeth has served as a director of Arrow Electronics, Inc. since 2004 and, in the past five years, she has served as a director of Peabody Energy Corporation.
Qualifications:
Ms. Keeths career with Shell has provided her with substantial
experience in managing worldwide operations and strategic partnerships in a capital-intensive business. Her expertise provides our Board with critical skills in the areas of financial oversight, aligning financial and strategic initiatives, and risk
management.
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|
Verizon
2017 Proxy
Statement
|
|
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9
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Item 1: Election of
Directors
|
Nominees for election
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Director since
2015
Age
65
Independent
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Karl-Ludwig Kley
Dr.
Kley
was Chairman of the Executive Board and Chief Executive Officer of Merck KGaA, a leading producer of high-tech products in
healthcare, life science and performance materials, from 2007 to 2016. Before joining Merck KGaA, Dr. Kley was a member of the Executive Board of Deutsche Lufthansa AG from 1998 to 2006, where he served as Chief Financial Officer. From 1982 to
1998, Dr. Kley worked for Bayer AG in a variety of positions, including as head of corporate finance and investor relations. Dr. Kley has served as vice chairman and a member of the supervisory board of BMW AG since 2010 and 2008,
respectively. He has also served as a member of the supervisory board of Deutsche Lufthansa AG since 2014 and as chairman of the supervisory board of E.ON SE since 2016.
Qualifications:
Dr. Kley brings to our Board significant leadership experience as CEO of an innovative, global operation that is navigating a highly
competitive, complex and rapidly changing ecosystem. His extensive expertise in corporate finance combined with his director roles on the boards of other public companies, provides our Board with a unique global perspective and critical capabilities
in strategic oversight and corporate governance.
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Director since
2011
Age
62
Chairman since
2012
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Lowell C. McAdam (Chairman)
Mr.
McAdam
is Chairman (since 2012) and Chief Executive Officer (since
2011) of Verizon Communications Inc. Prior to becoming CEO, Mr. McAdam served in numerous positions of responsibility, including President and Chief Operating Officer of Verizon Communications Inc., President and CEO of Verizon Wireless,
and Executive Vice President and Chief Operating Officer of Verizon Wireless. Before Verizon Wireless was formed, Mr. McAdam held executive positions with PrimeCo Personal Communications, AirTouch Communications and Pacific Bell.
Mr. McAdam spent six years in the U.S. Navy Civil Engineer Corps and became a licensed professional engineer in 1979. He has served as a director of General Electric Company since April 2016.
Qualifications:
Mr. McAdam provides our Board with substantial and wide-ranging
expertise in the telecommunications industry as well as a deep focus on innovation developed during his pivotal role in the formation and growth of Verizon Wireless. As CEO of Verizon Communications Inc., he provides our Board with
in-depth
knowledge of Verizons business, industry, challenges and opportunities.
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10
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|
|
Verizon
2017 Proxy Statement
|
Item 1: Election of
Directors
|
Nominees for election
|
|
|
Director since
2006
Age
60
Independent
Committees
Audit
Finance
Human Resources
(Chair)
|
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Clarence Otis, Jr.
Mr.
Otis
was Chairman (from 2005 to 2014) and Chief Executive Officer (from 2004 to 2014) of Darden Restaurants, Inc., the largest
company-owned and operated full-service restaurant company in the world. After joining Darden in 1995 as Vice President and Treasurer, Mr. Otis served in a number of positions of responsibility, including Chief Financial Officer, Executive
Vice President, and President of Smokey Bones Barbeque & Grill, a restaurant concept formerly owned and operated by Darden. Mr. Otis also served as a director of the Federal Reserve Bank of Atlanta a government-organized
financial and monetary policy organization from 2010 to 2015. Mr. Otis has served as a director of VF Corporation since 2004.
Qualifications:
Mr. Otis provides our Board with valuable insight into consumer services, retail operations and financial oversight. His experience over his
20 years at Darden Restaurants provides him with relevant perspectives on operations, strategy and management of a complex organization and a large-scale workforce, and his board service at the Federal Reserve Bank of Atlanta provides deep risk
management expertise.
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Director since
2010
Age
62
Independent
Committees
Corporate Governance
and Policy
Human Resources
|
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Rodney E. Slater
Mr.
Slater
has been a Partner at the law firm Squire Patton Boggs LLP
practicing in the areas of transportation, infrastructure and public policy, since 2001. Previously, Mr. Slater served as the U.S. Secretary of Transportation from 1997 to 2001 and as the Administrator of the Federal Highway Administration from
1993 to 1997. Mr. Slater has served as a director of Kansas City Southern since 2001 and Transurban Group since 2009. In the past five years, Mr. Slater has also served as a director of Atkins plc.
Qualifications:
Mr. Slater has substantial regulatory and public policy experience at
the federal and state levels. Mr. Slater provides our Board with valuable insights on public policy issues and leadership on matters involving multiple stakeholders. He also provides our Board with perspectives on strategic partnerships and
legal issues.
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|
Verizon
2017 Proxy
Statement
|
|
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11
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Item 1: Election of
Directors
|
Nominees for election
|
|
|
Director since
2012
Age
54
Independent
Committees
Audit
Corporate Governance
and Policy
|
|
Kathryn A. Tesija
Ms.
Tesija
was Executive Vice President and Chief Merchandising and Supply Chain Officer of Target Corporation, the second largest discount
retailer in the United States, from 2008 to 2015. During her tenure at Target beginning in 1986, Ms. Tesija served in numerous positions of responsibility, including Director, Merchandise Planning, Senior Vice President, Hardlines Merchandising
and Strategic Advisor. Ms. Tesija has served on the board of Woolworths Limited since May 2016.
Qualifications:
Ms. Tesija provides our Board with valuable large-scale global merchandising and supply chain experience, as well as operational
perspectives and strategic planning expertise. Her tenure as an executive at Target Corporation provides our Board with additional insights into the retail industry and consumer
behavior.
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Director since
2013
Age
58
Independent
Committees
Audit
Human Resources
|
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Gregory D. Wasson
Mr.
Wasson
was President and Chief Executive Officer of Walgreens Boots
Alliance, Inc., the first global
pharmacy-led
health and wellbeing enterprise. From 2009 through 2014 he was Director, President and Chief Executive Officer of Walgreen Co. A registered pharmacist, he joined
Walgreen in 1980 and served in a number of positions of responsibility, including President of Walgreens Health Initiatives, Senior Vice President, Executive Vice President, and President and Chief Operating Officer. Mr. Wasson has served
on the board of The PNC Financial Services Group, Inc. since 2015 and, in the past five years, he has served on the boards of Walgreen Co. and AmerisourceBergen Corporation.
Qualifications:
Mr. Wasson provides our Board with valuable global operational and
management experience, as well as extensive knowledge of the retail and healthcare industries. His tenure as CEO of a large publicly-held company provides our Board with additional
in-depth
perspective in
organizational management.
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12
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|
|
Verizon
2017 Proxy Statement
|
Item 1: Election of
Directors
|
Nominees for election
|
|
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Director since
2015
Age
65
Independent
Committee
Audit (Chair)
|
|
Gregory G. Weaver
Mr.
Weaver
was Chairman and Chief Executive Officer of Deloittes audit and enterprise risk services firm, Deloitte & Touche
LLP, from 2012 to 2014 and from 2001 to 2005. From 2006 to 2012, he served on the Board of Directors of Deloittes U.S. organization and on its Governance, Compensation and Succession Committees. During Mr. Weavers 40 years of
experience at Deloitte, including 30 years as a partner, he served as lead client service partner, audit partner and advisory partner for several of Deloitte & Touches largest clients. Mr. Weaver has served on the board of
trustees of the Goldman Sachs Trust since 2015.
Qualifications:
Mr. Weaver provides
our Board with significant expertise in the areas of public accounting, risk management and related regulatory matters, which he developed over a long career with a leading audit firm. He also brings to the Board valuable experience with the
operational and governance issues faced by a large, complex organization like Verizon.
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|
Verizon
2017 Proxy
Statement
|
|
|
13
|
Board and Committees
Board leadership
|
|
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Each year, our Board evaluates whether its leadership structure is appropriate to effectively address the specific needs of our business and the long-term interests of our shareholders.
Given the dynamic and competitive environment in which Verizon operates, the Board believes that Verizon and our shareholders are best served by a Chairman who has broad and deep knowledge of Verizons business operations and the competitive
landscape, the ability to identify strategic issues, and the
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vision to create sustainable long-term value for shareholders. Based on these considerations, the Board has determined that, at this time, our CEO,
Lowell McAdam, is the Director best qualified to serve in the role of Chairman.
To maintain an
appropriate level of independent checks and balances in its governance, and consistent with the Corporate Governance Guidelines, the independent members of the Board have elected an independent Lead Director who has the authority to call Board
meetings and executive sessions. M. Frances Keeth currently serves as Lead Director.
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Lead Director
responsibilities
Chairs
executive sessions, including those held to evaluate the CEOs performance and compensation
Chairs any meeting of the Board if the Chairman is not present
Approves the schedule and agenda for all
Board meetings, in consultation with the Chairman
Acts as principal liaison with the Chairman
Leads the Boards annual
self-evaluation
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Any shareholder or interested party may communicate
directly with the Lead Director.
All Directors play an active role in overseeing
Verizons business at both the Board and committee level. Every Director may review the agenda for each Board and committee meeting in advance and can request changes. In addition, all Directors have unrestricted access to the Chairman and the
senior leadership team at all times.
The Board believes that shareholders are best served by this current leadership structure because it features an independent
Lead Director who provides independent and objective oversight and who can express the Boards positions in a forthright manner, as well as independent Directors who are fully involved in the Boards operations and decision making.
Board meetings and executive sessions
In 2016,
our Board of Directors held nine meetings, including seven regularly scheduled meetings and two special meetings. No Director standing for election attended fewer than 75% percent of the total number of meetings of our Board and the committees to
which the Director was assigned.
Directors standing for
re-election
are expected to attend the annual meeting of
shareholders. In 2016, all Directors standing for
re-election
attended the annual meeting.
The Corporate Governance
Guidelines require the independent Directors to meet in executive session without any members of management present at least twice a year to review and evaluate the performance of the Board and to evaluate the performance and approve the
compensation of the CEO. In practice, our Board typically meets in executive session during each regular Board meeting.
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14
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Verizon
2017 Proxy Statement
|
Board and
Committees
|
Board meetings and executive sessions
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Beyond the boardroom
Engagement outside of Board meetings provides our Directors with additional insight into our business
and our industry, and gives them valuable perspective on the
performance of our Company, the Board,
our CEO and other members of senior management, and on the Companys strategic direction.
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Our individual Directors have discussions with each other and with our CEO, and have informal individual and small group meetings with high potential members of our senior management team in order to gain insight into the
Companys management development program and succession pipeline.
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Our Committee Chairs and Lead Director meet and speak regularly with each other and with members of our management in connection with planning for meetings.
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Our Directors regularly attend deep dives on current topics of interest and technology training as part of their ongoing Director education program.
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Our Directors receive weekly updates on recent developments, press coverage and current events that relate to our business.
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Several Board members attended the 2016 Mobile World Congress in Barcelona, Spain, where they learned about the contemporary and future mobile industry, the latest technology trends affecting Verizons business, and
developments among Verizons business partners, industry peers and competitors.
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Several Board members attended the 2016 Consumer Electronics Show in Las Vegas, Nevada, where they learned about trends and innovations in the
business of consumer technologies and gained insights into where Verizons business is headed.
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Annual Board and committee evaluations
Our Board conducts an annual self-assessment aimed at enhancing its effectiveness. As part of the assessment, each Director completes a written questionnaire that is
designed to gather suggestions for improving Board effectiveness and to solicit feedback on a range of issues, including Board operations, Board and committee structure and dynamics, the flow of information from management, and agenda topics. In
addition, the Lead Director conducts individual interviews with each of the independent Directors to discuss these topics. The feedback received from the questionnaires and interviews is discussed during an evaluation session.
Each of the four standing committees also conducts its own annual self-assessment, which includes a written questionnaire and evaluation session. Evaluation sessions
are led by the committee chairs and generally include a review of the committee charter, the annual agenda, and the committees overall effectiveness.
In
addition to these annual self-assessments, the Board evaluates and modifies its oversight of Verizons operations on an ongoing basis. During their executive sessions, the independent Directors consider agenda topics that they believe deserve
additional focus and raise new topics to be addressed in future meetings.
The Corporate Governance and Policy Committee annually appraises the framework for our
Board and committee evaluation processes.
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Verizon
2017 Proxy
Statement
|
|
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15
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Board and Committees
|
The 2016 Board Self-Assessment Process
|
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The 2016 Board Self-Assessment Process
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Questionnaire
Written questionnaires for the Board and for each committee solicit Director feedback on an
unattributed basis
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One-on-one
discussions
Candid,
one-on-one
discussions between the Lead Director and each independent Director elicit further color on the Directors observations and suggestions
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Reporting
Summary of self-assessment results are provided to the Board
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Private sessions of independent
Directors
Closed session discussion of Board self-evaluation facilitated by our Lead
Director, and committee self-evaluation discussions facilitated by our independent committee chairs
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Feedback incorporated
Policies and practices updated as appropriate per self-assessment observations
and suggestions
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Ongoing
Director suggestions for improvements to self-assessment questionnaire and process incorporated the
following year
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Board committees
Our Board of Directors has established four standing committees: the Audit Committee, the Corporate Governance and Policy Committee, the Finance Committee, and the
Human Resources Committee. Each committee has a written charter that defines its specific responsibilities. The chair of each committee approves the agenda and materials for each meeting. Each committee has the authority to retain independent
advisors to assist it in carrying out its responsibilities.
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16
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|
Verizon
2017 Proxy Statement
|
Board and
Committees
|
Board committees
In addition, committee meetings are not held concurrently, which enables our Directors to sit on multiple committees.
Our newly appointed Directors also attend all committee meetings for six months to a year prior to being appointed to any particular committee, which allows them to understand the inner workings of all committees.
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Audit Committee
|
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Meetings in 2016
11
Members*
Gregory Weaver** (Chair)
Shellye Archambeau
M. Frances Keeth
Clarence Otis, Jr.
Kathryn Tesija
Gregory Wasson
*Mr. Nicolaisen served as Chair of the Audit Committee until he resigned from the Board on December 31, 2016.
**Mr. Weaver joined the Audit Committee on June 2, 2016 and was appointed as
Chair on January 9, 2017.
The Board has determined that each of Ms.
Archambeau, Ms. Keeth, Mr. Otis, Mr. Wasson and Mr. Weaver is an audit committee financial expert, and that each member of the Audit Committee meets the independence requirements of applicable law, the NYSE, Nasdaq and Verizons Corporate
Governance Guidelines. The Board also determined that Mr. Nicolaisen was an audit committee financial expert and met the same independence requirements during
his tenure on the Audit Committee
in 2016.
The Audit Committee Report is included on page 27.
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Key responsibilities:
Assess Verizons significant business risk exposures (including those related to data privacy, bribery and
corruption, and network security) and oversee the risk management program
Assess the adequacy of Verizons overall control environment
Oversee financial reporting and disclosure
matters
Appoint, approve fees for, and
oversee work of the independent registered public accounting firm
Oversee Verizons internal audit function
Assess Verizons compliance processes
and programs
Review the Chief Compliance
Officers annual report regarding
anti-corruption
compliance, compliance with significant regulatory obligations, export controls, and data protection
Assess policies and procedures for executive
officer expense accounts and perquisites, including the use of corporate assets
Assess procedures for handling complaints relating to accounting, internal accounting controls or auditing
matters
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Verizon
2017 Proxy
Statement
|
|
|
17
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Board and Committees
|
Board committees
|
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Corporate Governance and Policy Committee
|
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Meetings in 2016
7
Members*
M.
Frances Keeth (Chair)
Shellye Archambeau
Richard Carrión
Rodney Slater
Kathryn Tesija
*Mr. Nicolaisen served on the Corporate Governance and Policy Committee until he resigned from the Board on December 31, 2016.
The Board has determined that each member of the Corporate Governance and
Policy Committee meets the independence requirements of applicable law, the NYSE, Nasdaq
and Verizons Corporate Governance Guidelines. The Board made the
same determination of Mr. Nicolaisen for 2016.
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Key responsibilities:
Evaluate the structure and practices of our Board and its committees, including size, composition, independence
and operations
Recommend changes to our
Boards policies or practices or the Corporate Governance Guidelines
Identify and evaluate the qualifications of Director candidates
Recommend Directors to serve as members of
each committee and as committee chairs
Review potential related person transactions
Review Verizons position and engagement
on important public policy issues that may affect our business and reputation, including direct and indirect political contributions, lobbying activities and corporate social responsibility
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Finance Committee
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Meetings in 2016
4
Members
Richard Carrión (Chair)
Mark Bertolini
Melanie Healey
M. Frances Keeth
Clarence Otis, Jr.
Our Board has determined that each member of the Finance Committee meets the
independence requirements of applicable law, the NYSE, Nasdaq and Verizons Corporate Governance Guidelines.
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Key responsibilities:
Monitor Verizons capital needs and financing arrangements and ability to access the capital
markets
Monitor expenditures under the
annual capital plan approved by our Board
Review and approve Verizons derivatives policy and monitor the use of derivatives
Review Verizons insurance and
self-insurance programs
Oversee the
investment of pension assets and the funding of pension and other postretirement benefit obligations
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18
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Verizon
2017 Proxy Statement
|
Board and
Committees
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Board committees
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Human Resources Committee
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Meetings in 2016
6
Members
Clarence Otis, Jr. (Chair)
Richard Carrión
Melanie Healey
Rodney Slater
Gregory Wasson
Our Board has determined that each member of the Human Resources Committee
meets the independence requirements of applicable law, the NYSE, Nasdaq and Verizons Corporate Governance Guidelines.
The Compensation Committee
Report is included on page 48.
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Key responsibilities:
Oversee the development of Verizons executive compensation programs and policies
Approve corporate goals relevant to the
CEOs compensation
Evaluate the
CEOs performance and recommend his compensation to the Board
Review and approve compensation and benefits for selected senior managers
Review the impact of Verizons executive
compensation policies and practices, and the performance metrics underlying the compensation programs, on Verizons risk profile
Consult with the CEO on talent development
Oversee succession planning and assignments
to key leadership positions
Review
and recommend
non-employee
Director compensation
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Verizon
2017 Proxy
Statement
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19
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Board and Committees
|
Risk oversight
Risk oversight
Role of the Board
While senior management has
primary responsibility for managing risk, our Board of Directors is responsible for risk oversight. The Board works with senior management to develop a comprehensive view of Verizons key short- and long-term business risks. Verizon has a
formalized business risk management reporting process that is designed to provide visibility to the Board about critical risks and risk mitigation strategies.
The
Board of Directors oversees the management of risks inherent in the operation of Verizons businesses and the implementation of its strategic plan by using several different levels of review. The Board addresses the primary risks associated
with Verizons business units and corporate functions in its operations reviews of those units and functions. In addition, the Board reviews the risks associated with Verizons strategic plan at an annual strategic planning session and
periodically throughout the year.
Role of the committees
Each of our Board committees oversees the management of risks that fall within that committees areas of responsibility. In performing this function, each
committee has full access to management and may engage advisors.
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Audit Committee
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Oversees the operations of Verizons enterprise risk management program, which identifies the
primary risks to Verizons business.
Periodically monitors and evaluates the primary risks associated with particular business units
and functions.
Works with
Verizons Senior Vice President of Internal Auditing, who helps identify, evaluate and implement risk management controls and methodologies to address identified risks and who functionally reports directly to the Committee.
Meets privately at each Audit
Committee meeting with representatives from the independent registered public accounting firm, the Senior Vice President of Internal Auditing, and the Executive Vice President of Public Policy and General Counsel.
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Corporate
Governance and
Policy Committee
|
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Reviews business and reputational risks relating to Verizons position and engagement
on important public policy issues, including political contributions and corporate social responsibility.
Oversees business and reputational risks relating to Verizons products and services.
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Finance Committee
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Assists our Board in its oversight of financial risk management.
Monitors Verizons capital
needs and financing plans and oversees the strategy for managing risk related to currency and interest rate exposure.
Reviews and approves Verizons derivatives policy and monitors the use of derivatives.
Reviews Verizons insurance
and self-insurance programs, as well as pension and other postretirement benefit obligations.
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Human Resources
Committee
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Considers the
impact of the executive compensation program and of the incentives created by the compensation awards on Verizons risk profile.
Oversees managements annual assessment of compensation risk arising from
Verizons compensation policies and practices.
Based on managements review,
Verizon has concluded that our compensation policies and procedures are not reasonably likely to have a material adverse effect on Verizon because they are appropriately structured and discourage employees from taking excessive risks.
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20
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Verizon
2017 Proxy Statement
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Board and
Committees
|
Risk oversight
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What about cybersecurity risk?
While the Audit Committee has primary responsibility for overseeing Verizons risk management program relating to privacy and network security, the full
Board participates in an annual review and discussion led by our Chief Information Security Officer dedicated to Verizons cyber risks and threats and cyber protections.
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Management succession planning and development
Verizons Board of Directors recognizes that one of its most important duties is to ensure continuity in our senior leadership by overseeing the development of
executive talent and planning for the efficient succession of the CEO. Our Board has delegated primary oversight responsibility for succession planning to the Human Resources Committee, which oversees assignments to key leadership positions. The
Human Resources Committee reports on its activities to the full Board, which addresses succession planning during executive sessions that typically occur in connection with each regularly scheduled meeting.
To ensure that the succession planning and management development process supports and enhances Verizons strategic objectives, the Board and Human Resources
Committee regularly consult with the CEO on Verizons organizational needs and competitive challenges, the potential of key managers, and plans for future developments and emergency situations. As part of this process, the Board and the Human
Resources Committee also routinely seek input from the Chief Administrative Officer, as well as advice on related compensation issues from the Human Resources Committees independent compensation consultant.
Our Board generally conducts an
in-depth
review of senior leader development and succession planning at least once a year. Led
by the CEO and the Chief Administrative Officer, this review addresses Verizons management development initiatives, assesses senior management resources, and identifies individuals who should be considered as potential future senior
executives.
Our goal is to develop well-rounded and experienced senior leaders. High potential executives are challenged regularly with additional
responsibilities, new positions or promotions to expose them to our diverse operations. These individuals are often positioned to interact more frequently with the Board, both in full Board meetings and in less formal settings and small groups, so
the Directors can get to know and assess them.
Shareholder engagement
Ongoing communication with our shareholders helps the Board and senior management gain useful feedback on a wide range of subjects and understand the issues that matter
most to our shareholders. Verizon views accountability to shareholders as both a mark of good governance and a critical component of our success. In 2016, management and our Directors spent a great deal of time in meetings and discussions with our
shareholders on a variety of issues, including:
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Board composition and succession
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Executive compensation
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Sustainability and corporate responsibility
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Operational performance
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Board leadership
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Risk management
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The information learned in these discussions serves as the foundation for our policies and informs our business
strategy on an ongoing basis.
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Verizon
2017 Proxy
Statement
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21
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Board and Committees
|
Communicating with Directors
Communicating with Directors
Our Board of Directors believes that communication with shareholders and other interested parties is an important part of the governance process, and has adopted the
following procedure to facilitate this communication.
How to contact the Board
Any shareholder or interested party may communicate directly with our Board, any committee of our Board, any individual Director
(including the Lead Director and the committee chairs) or the
non-employee
Directors as a group, by writing to:
Verizon Communications Inc.
Board of Directors
(or committee name, individual Director,
Lead Director, committee chair or
non-employee
Directors as a group, as appropriate)
1095 Avenue of the Americas
New York, New York 10036
Verizons Corporate Secretary reviews all correspondence addressed to our Directors and periodically provides
the Board with copies of all communications that deal with the functions of our Board or its committees, or that otherwise require Board attention. Typically the Corporate Secretary will not forward communications that are of a personal nature or
are unrelated to the duties and responsibilities of our Board, including business solicitations or advertisements, mass mailings,
job-related
inquiries, or other unsuitable communications. All communications
involving substantive accounting or auditing matters are forwarded to the Chair of the Audit Committee.
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22
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Verizon
2017 Proxy Statement
|
Director Compensation
In 2016, each
non-employee
Director of Verizon received an annual cash retainer of $100,000. The Chairs of the Corporate
Governance and Policy Committee and the Finance Committee received an additional annual cash retainer of $15,000, and the Chairs of the Audit Committee and the Human Resources Committee, as well as the Lead Director, each received an additional
annual cash retainer of $25,000. In 2016, each
non-employee
Director also received a grant of Verizon share equivalents valued at $150,000 on the grant date. No meeting fees were paid if a
non-employee
Director attended a Board or Committee meeting on the day before or the day of a regularly scheduled Board meeting. Each
non-employee
Director who attended a
Board or Committee meeting held on any other date received a meeting fee of $2,000.
Each
non-employee
Director who joins
our Board receives a
one-time
grant of 3,000 Verizon share equivalents valued at the closing price on the date the new Director joins our Board.
All share equivalents that
non-employee
Directors receive are automatically credited to the Directors deferred
compensation account under the Verizon Executive Deferral Plan, and invested in a hypothetical Verizon stock fund. Amounts in a Directors deferred compensation account are paid in a cash lump sum in the year following the year the Director
leaves our Board.
Non-employee
Directors may choose to defer all or part of their annual cash retainer and meeting fees (if
any) under the Verizon Executive Deferral Plan. A
non-employee
Director may elect to invest these amounts in a hypothetical cash account that earns a return rate equal to the long-term, high-grade corporate
bond yield average as published by Moodys Investor Services, or in the other hypothetical investment options available to participants in Verizons Management Savings Plan.
One of our
non-employee
Directors who served as a director of a predecessor company is a participant in a charitable giving
program. Under this program, when a participant retires from the Board or attains age 65 (whichever occurs later) or dies, Verizon will make one or more charitable contributions in the aggregate amount of $1,000,000, payable in ten annual
installments. This program, which is closed to future participants, is financed through the purchase of insurance on the life of each participant. In 2016, the aggregate cost of maintaining and administering this program for the participant was
$15,000.
The
non-employee
Directors are eligible to participate in the Verizon Foundation Matching Gifts Program. Under
this program, which is open to all Verizon employees, the Foundation matches up to $5,000 per year of charitable contributions to accredited colleges and universities, $1,000 per year of charitable contributions to any
non-profit
with 501(c)(3) status, and $1,000 per year of charitable donations to designated disaster relief campaigns.
In
2016, based on the recommendation of the Human Resources Committee after its review of the Verizon compensation program and the programs of the Related Dow Peers, and in consultation with its independent compensation consultant, the Board determined
to increase the annual cash retainer paid to
non-employee
Directors to $125,000 and to increase the value of the Verizon share equivalents granted annually to
non-employee
Directors to $175,000, effective January 1, 2017. Prior to 2016, no changes had been made to the annual cash retainer or the annual equity grant value since 2012.
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Verizon
2017 Proxy
Statement
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23
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Director
Compensation
|
Director compensation in 2016
Director compensation in 2016
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Name
(a)
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Fees Earned
or Paid in Cash
2
($) (b)
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Stock
Awards
3
($) (c)
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Option
Awards
($) (d)
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Non-Equity
Incentive Plan
Compensation
($) (e)
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Change in Pension Value
and Nonqualified Deferred
Compensation Earnings
4
($) (f)
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All Other
Compensation
5
($) (g)
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Total
($) (h)
|
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|
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|
|
|
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Shellye Archambeau
|
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110,000
|
|
|
|
150,000
|
|
|
|
0
|
|
|
|
0
|
|
|
|
4,553
|
|
|
|
0
|
|
|
|
264,553
|
|
|
|
|
|
|
|
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|
Mark Bertolini
|
|
|
104,000
|
|
|
|
150,000
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
254,000
|
|
|
|
|
|
|
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|
Richard Carrión*
|
|
|
119,000
|
|
|
|
150,000
|
|
|
|
0
|
|
|
|
0
|
|
|
|
11,531
|
|
|
|
0
|
|
|
|
280,531
|
|
|
|
|
|
|
|
|
|
Melanie Healey
|
|
|
104,000
|
|
|
|
150,000
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
6,000
|
|
|
|
260,000
|
|
|
|
|
|
|
|
|
|
M. Frances Keeth*
|
|
|
152,000
|
|
|
|
150,000
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
5,000
|
|
|
|
307,000
|
|
|
|
|
|
|
|
|
|
Karl-Ludwig Kley
|
|
|
106,000
|
|
|
|
150,000
|
|
|
|
0
|
|
|
|
0
|
|
|
|
996
|
|
|
|
0
|
|
|
|
256,996
|
|
|
|
|
|
|
|
|
|
Donald
Nicolaisen*
1
|
|
|
137,000
|
|
|
|
150,000
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
287,000
|
|
|
|
|
|
|
|
|
|
Clarence Otis, Jr.*
|
|
|
137,000
|
|
|
|
150,000
|
|
|
|
0
|
|
|
|
0
|
|
|
|
20,721
|
|
|
|
0
|
|
|
|
307,721
|
|
|
|
|
|
|
|
|
|
Rodney Slater
|
|
|
104,000
|
|
|
|
150,000
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
254,000
|
|
|
|
|
|
|
|
|
|
Kathryn Tesija
|
|
|
110,000
|
|
|
|
150,000
|
|
|
|
0
|
|
|
|
0
|
|
|
|
6,645
|
|
|
|
0
|
|
|
|
266,645
|
|
|
|
|
|
|
|
|
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Gregory Wasson
|
|
|
112,000
|
|
|
|
150,000
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
262,000
|
|
|
|
|
|
|
|
|
|
Gregory Weaver
|
|
|
112,000
|
|
|
|
150,000
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
262,000
|
|
*
|
Denotes a chair of a standing committee during 2016. Ms. Keeth also served as Lead Director during 2016.
|
1
|
Mr. Nicolaisen retired from the Board on December 31, 2016.
|
2
|
This column includes all fees earned in 2016, whether the fee was paid in 2016 or deferred.
|
3
|
For each
non-employee
Director, this column reflects the grant date fair value of the
non-employee
Directors 2016 annual stock award
computed in accordance with FASB ASC Topic 718. The following reflects the aggregate number of share equivalent awards outstanding as of December 31, 2016 for each person who served as a
non-employee
Director during 2016: Shellye Archambeau, 13,675; Mark Bertolini, 9,321; Richard Carrión, 113,325; Melanie Healey, 22,544; M. Frances Keeth, 53,878; Karl-Ludwig Kley, 6,695; Donald Nicolaisen, 62,133; Clarence Otis, Jr., 61,422; Rodney
Slater, 32,981; Kathryn Tesija, 17,555; Gregory Wasson, 16,646; and Gregory Weaver, 7,324.
|
4
|
This column reflects above-market earnings on nonqualified deferred compensation plans. The above-market earnings consist of earnings on amounts that the individual has elected to invest in a hypothetical investment
option offered to all participants under the nonqualified deferred compensation plans that earns a return rate equal to the long-term, high-grade corporate bond yield average as published by Moodys Investors Services. The earnings are
considered above market in accordance with SEC rules because the interest crediting rate for this investment option (which for 2016 was approximately 4.18% annually) exceeded 120% of the corresponding applicable federal long-term rate established by
the Internal Revenue Service (IRS) (which for 2016 was 2.25%).
Non-employee
Directors do not participate in any defined benefit pension plan.
|
5
|
This column reflects matching contributions made on the
non-employee
Directors behalf under the Verizon Foundation Matching Gift Program.
|
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|
|
24
|
|
|
Verizon
2017 Proxy Statement
|
Audit Matters
Item 2: Ratification of Appointment of
Independent Registered Public Accounting Firm
The Audit Committee considered the performance and qualifications of Ernst & Young LLP, and has reappointed that independent registered public accounting firm
to examine the financial statements of Verizon for fiscal year 2017 and to examine the effectiveness of internal control over financial reporting. Ernst & Young has been retained as Verizons independent registered public accounting
firm since 2000.
Verizon paid the following fees to Ernst & Young for services rendered during fiscal years 2016 and 2015.
|
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|
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|
|
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Audit fees
|
|
|
Audit-related fees
|
|
|
Tax fees
|
|
|
All other fees
|
|
2016
|
|
|
$28.6 million
|
|
|
|
$20.6 million
|
|
|
|
$3.7 million
|
|
|
|
$0.0 million
|
|
2015
|
|
|
$27.4 million
|
|
|
|
$17.1 million
|
|
|
|
$3.8 million
|
|
|
|
$0.1 million
|
|
Audit fees include the financial statement audit, the audit of the effectiveness of Verizons internal control over financial
reporting required by the Sarbanes-Oxley Act, and financial statement audits required by statute for our foreign subsidiaries or by regulatory agencies in the United States. Audit-related fees primarily include audits of other subsidiaries, employee
benefit plan audits and reviews of controls over services provided to customers, as well as other audit and due diligence procedures performed in connection with acquisitions or dispositions. Tax fees primarily consist of federal, state, local and
international tax planning and compliance. All other fees primarily consist of support services to certain Verizon expatriate employees. The Audit Committee considered, in consultation with management and the independent registered public accounting
firm, whether Ernst & Youngs could provide these services while maintaining independence.
The Audit Committee is directly responsible for the
appointment, compensation, retention and oversight of the independent registered public accounting firm that performs audit services. In considering Ernst & Youngs appointment for the 2017 fiscal year, the Committee
reviewed the firms qualifications and competencies, including the following factors:
|
|
Ernst & Youngs historical performance and its recent performance during its engagement for the 2016 fiscal year;
|
|
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Ernst & Youngs capability and expertise in handling the breadth and complexity of Verizons operations;
|
|
|
the qualifications and experience of key members of the engagement team, including the lead engagement partner, for the audit of Verizons financial statements;
|
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the quality of Ernst & Youngs communications with the Committee regarding the conduct of the audit, and with management with respect to issues identified in the audit;
|
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external data on audit quality and performance, including recent Public Company Accounting Oversight Board reports, on Ernst & Young;
|
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the appropriateness of Ernst & Youngs fees for audit and
non-audit
services, on both an absolute basis and as compared to its peer firms; and
|
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Ernst & Youngs reputation for integrity and competence in the fields of accounting and auditing.
|
In
addition, in order to ensure continuing auditor independence, the Committee periodically considers whether there should be a regular rotation of the independent registered public accounting firm. The Committee ensures that the mandated rotation of
Ernst & Youngs personnel occurs routinely and is directly involved in the selection of Ernst & Youngs lead engagement partner.
|
|
|
Verizon
2017 Proxy
Statement
|
|
|
25
|
Audit Matters
|
Item 2: Ratification of Appointment of Independent Registered Public Accounting Firm
The Committee has established policies and procedures regarding
pre-approval
of services provided by the independent registered public accounting firm and is responsible for negotiating the audit fees associated with the engagement. At the beginning of the fiscal year, the Committee
pre-approves
the engagement of the independent registered public accounting firm to provide audit services based on fee estimates. The Committee also
pre-approves
proposed audit-related services, tax services and other permissible services based on specified project and service details, fee estimates, and aggregate fee limits for each service category. The Committee receives a report at each meeting on the
status of services provided or to be provided by the independent registered public accounting firm and approves the related fees.
The affirmative vote of a
majority of the shares cast at the annual meeting is required to ratify the reappointment of Ernst & Young for the 2017 fiscal year. The Committee believes that continuing to retain Ernst & Young to serve as Verizons
independent registered public accounting firm is in the best interests of Verizon and our shareholders. If this appointment is not ratified by the shareholders, the Committee will reconsider its decision.
One or more representatives of Ernst & Young will be at the 2017 Annual Meeting of Shareholders. They will have an opportunity to make a statement and will be
available to respond to appropriate questions.
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Our Board of Directors recommends that you vote for
ratification.
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26
|
|
|
Verizon
2017 Proxy Statement
|
Audit Committee Report
In the performance of our oversight responsibilities, the Committee has reviewed and discussed with management and the independent registered public accounting firm
Verizons audited financial statements for the year ended December 31, 2016, and the effectiveness of Verizons internal controls over financial reporting as of December 31, 2016.
The Committee has discussed with the independent registered public accounting firm the matters required to be discussed by the Securities and Exchange Commission, the
New York Stock Exchange, The Nasdaq Stock Market and Statement on Auditing Standards No. 1301, as adopted by the Public Company Accounting Oversight Board in Rule 3200T.
The Committee has received written disclosures and a letter from the independent registered public accounting firm consistent with applicable Public Company Accounting
Oversight Board requirements for independent registered public accounting firm communications with audit committees concerning independence, and has discussed with the independent registered public accounting firm its independence.
The Committee discussed with the internal auditors and the independent registered public accounting firm the overall scope and plans for their respective audits.
The Committee met with the internal auditors and the independent registered public accounting firm, with and without management present, to discuss the results of their examinations, their evaluations of Verizons internal controls and the
overall quality of Verizons financial reporting.
The Committee has overseen the operation of Verizons enterprise risk management program,
including the identification of the primary risks to Verizons business. The Committee also periodically monitored and evaluated the primary risks associated with particular business units and functions.
Based on the reviews and discussions referred to above, in reliance on management and the independent registered public accounting firm, and subject to the limitations
of our role, the Committee recommended to the Board of Directors, and the Board has approved, the inclusion of the financial statements referred to above in Verizons Annual Report on Form
10-K
for
the year ended December 31, 2016.
The Committee reviewed the independent registered public accounting firms performance, qualifications and tenure, the
qualifications of the lead engagement partner, managements recommendation regarding retention of the firm, and considerations related to audit firm rotation, as discussed further on page 25. Based on that review, the Committee approved the
reappointment of the independent registered public accounting firm for fiscal year 2017.
Respectfully submitted,
The Audit Committee
Gregory Weaver, Chair
Shellye Archambeau
M. Frances Keeth
Clarence Otis, Jr.
Kathryn Tesija
Gregory Wasson
March 3, 2017
|
|
|
Verizon
2017 Proxy
Statement
|
|
|
27
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Executive Compensation
Compensation Discussion and Analysis
The Human Resources Committee of the Board of Directors oversees the development and implementation of the compensation program for Verizons named executive
officers.
For 2016, Verizons named executive officers were:
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Lowell C. McAdam
Chairman and
Chief Executive Officer
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Matthew D. Ellis*
Executive Vice President and
Chief Financial Officer
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John G. Stratton
Executive Vice President and
President of Operations
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Marni M. Walden
Executive Vice President and
President of Product Innovation
and New Businesses
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Marc C. Reed
Executive Vice President and
Chief Administrative Officer
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Francis J. Shammo*
Former Executive Vice President
and Chief Financial Officer
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*
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Mr. Ellis became Executive Vice President and Chief Financial Officer on November 1, 2016, when Mr. Shammo stepped down from that position. Mr. Shammo retired on December 31, 2016 after a long
and distinguished career with Verizon.
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Executive summary
Key 2016 compensation decisions
Chief
Financial Officer appointment.
Mr. Ellis was promoted to Chief Financial Officer in November 2016. In light of Mr. Ellis increased responsibilities, the Committee approved a new base salary of $700,000 and a target short-term
incentive award opportunity of 150% of base salary (on a prorated basis). In his prior role with Verizon, Mr. Ellis received a base salary increase in 2016 of 5.88%.
2016 base salary increases for other named executive officers
. Based on an analysis of market data, the Committee approved base salary increases in 2016 of 2.9%
for Mr. Stratton, 2.9% for Ms. Walden, 6.7% for Mr. Reed and 2.8% for Mr. Shammo. Mr. McAdam did not receive a base salary increase.
Changes in 2016 short-term metrics.
The Committee rebalanced the weightings of the financial metrics for the Short-Term Incentive Plan (Short-Term Plan) from
2015 to place a greater emphasis on revenue generation.
2016 performance payouts
. Based on Verizons 2016 financial performance, the 2016 short-term
incentive award was paid at 80% of its targeted level. Based on Verizons total shareholder return (TSR) and free cash flow (FCF) over the past three years, the Performance Stock Units (PSUs) granted as part of the 2014-2016 long-term incentive
award vested at 85% of the targeted level.
CEO
special
one-time
equity award earned.
When Mr. McAdam was
appointed CEO in August 2011, he was granted a special equity award to provide an additional incentive to drive performance and create shareholder value. The equity award was composed of PSUs and Restricted Stock Units (RSUs) that were eligible to
vest at the end of the five-year performance cycle ending July 31, 2016. The award was payable in shares with a
two-year
holding requirement. During this
5-year
performance cycle, a $100 investment in Verizon grew to $197.56, as Verizons TSR was 97.6% and Verizons share price appreciated in value from $35.29 to $55.41. Based on Verizons average annual return on equity during the five-year
performance cycle, the PSUs vested at 200% of the targeted level. Mr. McAdam is required to hold the shares received on payment of the PSUs and RSUs (net of tax withholding) through at least July 31, 2018.
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28
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Verizon
2017 Proxy Statement
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Compensation Discussion and
Analysis
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Executive Summary
Best practices in executive compensation and governance
Our compensation program reflects our commitment to industry-leading standards for compensation design and governance. The Committee regularly reviews best practices in
executive compensation and governance and revises our policies and practices when appropriate. The following table highlights some features of our compensation program that demonstrate the rigor of our policies.
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Compensation practice
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Verizon policy
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More information on page
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Pay for performance
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Approximately 90% of named executive
officers total compensation opportunity is variable, incentive-based pay.
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34
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Robust stock ownership
guidelines
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We have stock ownership guidelines for
the CEO of 7x base salary; for other named executive officers of 4x base salary; and for Directors of 3x the cash component of the annual Board retainer.
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46
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Shareholder outreach
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Our outreach program gives
institutional shareholders a regular opportunity to express their views about our executive compensation program and policies. Shareholder input is carefully considered by the Human Resources Committee.
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31
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Double-trigger change
in control
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Our Long-Term Incentive Plan requires
both a change in control and an involuntary termination for accelerated vesting of awards.
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46
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Clawback policy
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Our clawback policy gives us the right
to cancel or claw back incentive compensation from any senior executive who has engaged in willful misconduct that results in significant reputational or financial harm to Verizon
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47
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Annual compensation
risk assessment
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We perform a risk assessment of our compensation program
every year.
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20
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Independent
compensation
consultant
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An independent compensation consultant
reviews and advises the Committee on executive compensation. The consultant cannot do any work for the Company while it is engaged by the Committee.
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30
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Anti-hedging policy
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Our anti-hedging policy prohibits
Directors, executives and employees who receive equity-based incentive awards from entering into transactions designed to hedge or offset any decrease in the market value of Verizon stock that they own.
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46
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Single peer group for
benchmarking
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To promote consistency and
transparency, the same peer group (Related Dow Peers) is used to benchmark executives total compensation opportunity and to evaluate long-term performance.
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31
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Annual shareholder
say-on-pay
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We value our shareholders input
on our executive compensation program, so our Board seeks a
non-binding
advisory vote from shareholders every year to approve the executive compensation disclosed in our CD&A and compensation tables.
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64
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Tax
gross-ups
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We do not provide tax
gross-ups
to our executive officers.
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44
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Dividends on unearned performance
awards
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We do not pay dividends on unearned Performance Stock Units or
Restricted Stock Units.
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40
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Employment contracts
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None of our named executive officers has an employment contract.
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45
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Guaranteed benefits
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Beginning in 2006, we froze the defined benefit pension and
supplemental benefits.
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45
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Verizon
2017 Proxy
Statement
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29
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Compensation Discussion and
Analysis
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Roles and responsibilities
Roles and responsibilities
Human Resources Committee
The Human Resources
Committee of the Board of Directors oversees the development and implementation of the compensation program for Verizons named executive officers. The CEOs compensation is determined by the independent members of the Board after
receiving the Committees recommendation. References to the Committee in this section with respect to the CEOs compensation reflect that process.
Management
The Committee may consult with the Executive Vice President and Chief Administrative Officer about the design,
administration and operation of the compensation program. The Committee has delegated administrative responsibility for implementing its decisions on compensation and benefits matters to the Chief Administrative Officer, who reports to the
Committee on the actions taken under this delegation.
The Committee seeks the CEOs views on whether the existing compensation policies and practices continue
to support Verizons business and performance objectives, utilize appropriate performance targets, and appropriately reward the contributions of the other named executive officers. While the Committee values the CEOs insight, ultimately
the Committee makes an independent determination on all matters related to the compensation of the named executive officers.
Independent
compensation consultant
The Committee has the sole authority to retain and terminate a compensation consultant and to approve all terms of the
engagement, including fees. The Committee has retained Pearl Meyer as its compensation consultant (Consultant) based on the firms independence and expertise in representing the compensation committees of large corporations. The Consultant
advises the Committee on all matters related to the compensation of our named executive officers and our
non-employee
Directors. This includes providing benchmarking data and helping the Committee interpret
this data, as well as helping the Committee interpret data gathered by the Company. The Consultant participates in all Committee meetings and confers regularly with the Committee in executive session at those meetings.
Committee policy prohibits the Consultant from doing any work for the Company during its engagement. Neither Pearl Meyer nor its affiliates have performed any work for
the Company or any Company affiliate since the Committee first retained the Consultant in 2006.
The Committee has considered the independence of Pearl Meyer in
light of SEC rules and NYSE and Nasdaq listing standards. At the Committees request, Pearl Meyer provided a letter addressing its independence, including the following factors:
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No other services provided to the Company by the Consultant;
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Fees paid by the Committee as a percentage of the Consultants total revenue;
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Policies or procedures maintained by the Consultant that are designed to prevent a conflict of interest;
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Any business or personal relationships between the individual consultants involved in the engagement and a member of the Committee;
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Any Company stock owned by the individual consultants involved in the engagement; and
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Any business or personal relationships between our executive officers and the Consultant or the individual consultants involved in the engagement.
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The Committee has concluded that no conflict of
interest exists that would prevent Pearl Meyer from serving as an independent consultant to the Committee.
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30
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Verizon
2017 Proxy Statement
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Compensation Discussion and
Analysis
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Shareholder feedback on compensation
Shareholder feedback on compensation
Our Board, the Committee and our management team value shareholder perspectives on our executive compensation program. As part of the Committees annual review of
the program, it considers the outcome of Verizons annual shareholder advisory vote on executive compensation the
say-on-pay.
At our Annual
Meeting in May 2016, the compensation of our named executive officers was approved by approximately 92% of votes cast, demonstrating a high level of shareholder support for our compensation program and policies.
Management and Directors engaged with our institutional shareholders in meetings and calls throughout the year. In Verizons 2016 fall outreach, management, along
with the Consultant, engaged with our institutional shareholders concerning executive compensation. In particular, we discussed the Committees choice of performance metrics for awards issued under the Long-Term Incentive Plan (Long-Term Plan),
the rationale for the peer group utilized for compensation benchmarking and performance measurement, proposed changes to the Long-Term Plan and recent SEC compensation disclosure initiatives. Our investors continued to voice support for our overall
compensation program, believing it to be well-structured and aligned with the Companys performance. Based on this feedback, the results of our 2016
say-on-pay
vote, and the history of strong shareholder support in prior
say-on-pay
votes, the Committee believes our shareholders continue to strongly support Verizons
executive compensation program.
Peer group
The Committee uses the same
peer group to benchmark executive pay opportunities and to evaluate Verizons relative stock performance under the Long-Term Plan. This peer group, which we call the Related Dow Peers, includes the 29 companies (other than Verizon) in the Dow
Jones Industrial Average, plus Verizons five largest industry competitors that are not included in the Dow Jones Industrial Average. This group of companies is appropriate for the dual purpose of benchmarking executive pay opportunities and
evaluating relative stock performance under the Long-Term Plan because it is comprised of companies similar to us in market capitalization, net income, revenue and total employees, as well as Verizons five other largest industry competitors.
These companies represent Verizons primary competitors for executive talent and investor dollars. Moreover, this peer group is self-adjusting so that changes in the companies included in the Dow Jones Industrial Average are also reflected in
the Related Dow Peers over time. For these reasons, the Committee believes that use of the Related Dow Peers provides a consistent measure of Verizons performance and makes it easier for shareholders to understand, evaluate and monitor
Verizons compensation program.
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Verizon
2017 Proxy
Statement
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31
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Compensation Discussion and
Analysis
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Peer group
Related Dow Peer information
The following chart shows the companies included in the Related Dow Peers, as constituted on March 4, 2016, the date of the 2016 PSU grant. The chart includes each
companys market capitalization as of December 31, 2016 as reported by Bloomberg, as well as net income attributable to the company, revenue and total number of employees as of each companys most recent fiscal
year-end
as reported in SEC filings.
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Company
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Market
Capitalization
($ Millions)
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Net Income
Attributable to
the Company
($ Million)
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Revenue
($ Millions)
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Total
Employees
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3M
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$107,404
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$5,050
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$30,109
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91,584
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Verizons rank among Related Dow Peers
(35 companies)
10th
Market capitalization
6th
Net income
6th
Revenue
11th
Total employees
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American Express
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$67,802
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$5,408
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$33,823
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56,400
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Apple
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$617,588
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$45,687
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$215,639
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116,000
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AT&T
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$261,177
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$12,976
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$163,786
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268,000
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Boeing
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$96,080
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$4,895
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$94,571
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150,500
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Caterpillar
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$54,260
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($67
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$38,537
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95,400
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Charter Communications*
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$89,539
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$3,522
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$29,003
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91,500
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Chevron
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$222,190
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($497
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$103,310
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55,200
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Cisco Systems
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$151,697
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$10,739
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$49,247
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73,700
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Coca-Cola
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$178,815
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$6,527
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$41,863
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100,300
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Comcast
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$165,225
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$8,695
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$80,403
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159,000
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Du Pont
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$63,810
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$2,513
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$24,594
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46,000
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Exxon Mobil
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$374,281
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$7,840
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$197,518
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71,100
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General Electric
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$279,546
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$8,831
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$119,687
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295,000
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Goldman Sachs Group
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$99,960
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$7,398
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$37,712
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34,400
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Home Depot
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$163,331
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$7,957
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$94,595
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400,000
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IBM
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$157,832
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$11,872
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$79,919
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380,300
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Intel
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$171,884
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$10,316
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$59,387
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106,000
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Johnson & Johnson
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$313,432
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$16,540
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$71,890
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126,400
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JPMorgan Chase
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$308,768
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$24,733
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$105,486
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243,355
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McDonalds
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$101,082
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$4,687
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$24,622
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375,000
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Merck
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$162,313
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$3,920
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$39,807
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68,000
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Microsoft
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$483,160
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$16,798
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$85,320
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114,000
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Nike
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$84,654
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$3,760
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$32,376
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70,700
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Pfizer
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$197,100
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$7,215
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$52,824
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96,500
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Procter & Gamble
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$224,997
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$10,508
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$65,299
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105,000
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Sprint Corporation
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$33,522
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($1,995
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$32,180
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30,000
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T-Mobile
US
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$47,389
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$1,460
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$37,242
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50,000
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Travelers
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$34,774
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$3,014
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$27,625
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30,900
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UnitedHealth Group
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$152,329
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$7,017
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$184,840
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230,000
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United Technologies
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$90,262
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$5,055
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$57,244
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202,000
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VISA
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$181,545
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$5,991
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$15,082
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14,200
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Wal-Mart
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$212,419
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$13,643
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$485,873
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2,300,000
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Walt Disney
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$165,862
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$9,391
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$55,632
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195,000
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Verizon
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$217,611
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$13,127
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$125,980
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160,900
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*
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Charter Communications is the successor company to Time Warner Cable as a result of a merger that occurred in May 2016.
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32
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Verizon
2017 Proxy Statement
|
Compensation Discussion and
Analysis
|
Peer group
Benchmarking total compensation opportunity
The Committee evaluates whether the compensation opportunities for our executives are appropriate and competitive by comparing each named executive officers total
compensation opportunity which represents the sum of the executives base salary and target award amounts under the Short-Term Plan and the Long-Term Plan to the total compensation opportunities for executives in comparable
positions at peer companies. The Committee references the 50
th
percentile of the Related Dow Peers when making this comparison. The Committee believes that the 50
th
percentile is an appropriate targeted level of total compensation opportunity because of Verizons size relative to the Related Dow Peers. A named executive officers total compensation
opportunity may be higher or lower depending upon the executives tenure and overall level of responsibility. The total amount of compensation an executive actually receives may vary from the targeted opportunity based on Verizons annual
and long-term performance results.
Compensation objectives and elements of compensation
Compensation objectives
Verizons
executive compensation program supports the creation of shareholder value through four key objectives:
Attract and retain high-performing executives
with the leadership abilities and experience necessary in an
enterprise with our scale, breadth, and complexity to develop and execute our business strategies, drive superior results, meet diverse challenges and build long-term shareholder value;
Pay for superior results and sustainable growth
by rewarding the achievement of challenging performance goals;
Drive performance and create shareholder value
by emphasizing variable,
at-risk
compensation with an appropriate balance of short-term and long-term objectives that align executive and shareholder interests; and
Manage risk through oversight and compensation design
features and practices that balance short-term and long-term incentives and cap maximum payments.
Our compensation program has two features the
Committee believes promote a performance-based culture that links the interests of management and shareholders. First, the compensation program focuses extensively on variable, performance-based compensation, with fixed compensation (base salary)
constituting only approximately 10% of each named executive officers total compensation opportunity. Second, we do not offer guaranteed defined benefit pension or supplemental pension benefits.
In establishing the mix of incentive pay for the named executive officers, the Committee balances the importance of meeting Verizons short-term business goals
with the need to create shareholder value over the longer term. To that end, long-term target compensation opportunities are more than double the annual base salary and short-term incentive target compensation opportunities. Moreover, since the
Long-Term Plan features three-year performance cycles, with awards consisting of PSUs subject to both performance-based and time-based vesting requirements and RSUs subject to time-based vesting requirements, we reward sustained performance and also
encourage high-performing executives to remain with Verizon.
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Verizon
2017 Proxy
Statement
|
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33
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Compensation Discussion and
Analysis
|
Compensation objectives and elements of compensation
Elements of compensation
The Committee determines the appropriate balance between fixed and variable pay elements, short- and long-term pay elements, and cash and equity-based pay elements when
setting total compensation opportunity at competitive levels.
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Pay element
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Characteristics
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Primary objective
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Base salary
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Annual fixed cash compensation
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Attract and retain high-performing and
experienced executives
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Short-term incentive
opportunity
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Annual variable cash compensation based
on the achievement of predetermined annual performance measures
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Motivate executives to achieve
challenging short-term performance targets
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Long-term incentive
opportunity
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Long-term variable equity awards
granted annually as a combination of PSUs and RSUs
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Align executives interests with
those of shareholders, encourage efforts to grow
long-term
value, and retain executives
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While the Committee does not benchmark each individual element of compensation by targeting each such element to a specified market
level, it does review market data with respect to the mix of annual cash and long-term equity components for similarly situated executives among the Related Dow Peers.
Compensation mix
The Committee believes that a
substantial majority of each named executive officers total compensation opportunity should be variable and at risk in order to emphasize a performance-based culture. Accordingly, for 2016, the Committee allocated approximately 10% of
each executives total compensation opportunity in the form of base salary, 20% in the form of short-term incentive, and 70% in the form of long-term incentive.
The following chart illustrates the approximate allocation of the named executive officers 2016 total compensation opportunity between variable, performance-based
elements and fixed pay.
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The named executive officers are also eligible to receive medical, disability and
savings plan benefits that are generally provided to all management employees, as well as certain other benefits that are described under Other elements of the compensation program beginning on page 44.
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Performance target setting
The Committee
takes a holistic approach to establishing performance targets under our incentive plans. Targets are set at the time of the Boards annual strategy session to ensure that our executives compensation opportunities are aligned with
Verizons short- and long-term strategic goals. In establishing performance targets, the Committee recognizes the importance of achieving an appropriate balance between rewarding executives for strong performance over both the short- and
long-term and establishing realistic goals that continue to motivate and retain executives. As a result, our Short-Term and Long-Term Plans provide for measurable, rigorous performance targets that are attainable, but challenge executives to drive
business results that generate shareholder value.
|
|
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34
|
|
|
Verizon
2017 Proxy Statement
|
Compensation Discussion and
Analysis
|
Performance target setting
In setting the performance targets, the Committee considered the following factors:
|
|
Verizons short- and long-term strategy;
|
|
|
Economic, industry and competitive environments;
|
|
|
The creation of shareholder value;
|
|
|
The achievement level of performance targets in the prior year;
|
|
|
Financial analysts consensus estimates for the performance measures over future performance cycles;
|
|
|
The correlation among the performance measures and considerations of how Verizons operational performance will affect each measure differently; and
|
|
|
With regard to the diversity and sustainability metric in the Short-Term Plan, Verizons values and long-term commitment to being a responsible member of the communities we serve.
|
2016 annual base salary
To determine an executives base salary, the Committee, with assistance from the Consultant, considers the pay practices of the Related Dow Peers for comparable
positions; the executives experience, tenure and scope of responsibility; internal pay equity; and continuity planning and management development considerations. In particular, the Committee focuses on how base salary levels may impact the
market competitiveness of an executives total compensation opportunity.
Based on its assessment, the Committee approved base salary increases in 2016 of 2.9%
for Mr. Stratton, 2.9% for Ms. Walden, 6.7% for Mr. Reed and 2.8% for Mr. Shammo. In his prior role with Verizon, Mr. Ellis received a base salary increase in 2016 of 5.88%. When Mr. Ellis was promoted to Chief
Financial Officer in November 2016, the Committee approved a new base salary of $700,000, which reflects the scope and breadth of his new position. The Committee determined these adjustments were appropriate to provide these named executive officers
a total compensation opportunity appropriate for each officer, in light of the Committees reference of the 50
th
percentile for comparable executives within the Related Dow Peers and the goal
of providing a compensation mix that limits base salary to approximately 10% of the total compensation opportunity. Applying this same methodology, the Committee determined that Mr. McAdams base salary should not be adjusted in 2016.
2016 short-term incentive compensation
The Verizon Short-Term Plan
motivates executives to achieve challenging short-term performance targets. Each year, the Committee establishes the potential value of the awards under the Short-Term Plan, as well as the performance targets required to achieve these awards.
The Committee sets the values of the Short-Term Plan award opportunities as a percentage of an executives base salary based on both the scope of the
executives responsibilities and the competitive pay practices of the Related Dow Peers. The Short-Term Plan award opportunities at the threshold, target and maximum levels for each of the named executive officers are shown in the Grants
of plan-based awards table on page 51.
For the named executive officers other than Mr. Ellis, target award opportunities, expressed as a percentage of
base salary, did not change for 2016. However, the dollar value of the 2016 target award opportunities for Mr. Stratton, Ms. Walden, Mr. Reed and Mr. Shammo increased from 2015 as a result of the base salary increases described
above. Mr. McAdam did not receive a salary increase in 2016, so the dollar value of his 2016 target award opportunity was the same as it was in 2015. When Mr. Ellis was promoted to Chief Financial Officer in November 2016, his target award
opportunity was increased from 90% to 150% of his base salary on a prorated basis. The dollar value in the 2016 Short-Term Plan target award opportunity table on page 36 reflects this increase.
|
|
|
Verizon
2017 Proxy
Statement
|
|
|
35
|
Compensation Discussion and
Analysis
|
2016 short-term incentive compensation
The following table shows the 2016 Short-Term Plan target award opportunity for each of the named
executive officers.
2016 Short-Term Plan target award opportunity
|
|
|
|
|
|
|
|
|
Named executive officer
|
|
As a percentage of base salary
|
|
|
As a dollar value
|
|
Mr. McAdam
|
|
|
250%
|
|
|
|
$4,000,000
|
|
Mr. Ellis*
|
|
|
150%
|
*
|
|
|
$512,500
|
|
Mr. Stratton
|
|
|
150%
|
|
|
|
$1,350,000
|
|
Ms. Walden
|
|
|
150%
|
|
|
|
$1,350,000
|
|
Mr. Reed
|
|
|
150%
|
|
|
|
$1,200,000
|
|
Mr. Shammo
|
|
|
150%
|
|
|
|
$1,387,500
|
|
*
|
Mr. Ellis target award opportunity was 90% of his base salary prior to November 2016. The dollar value shown here reflects Mr. Ellis total target award opportunity for 2016 after giving effect to
the prorated increase to his target award percentage in November 2016.
|
Annual performance measures
In the first quarter of each year, the Committee establishes financial and operational performance measures for the Short-Term Plan that are consistent with
Verizons strategic goals. For each such measure, the Committee sets a target that is appropriate to motivate executives to achieve challenging performance levels. Verizons performance with respect to these measures determines the amount
of the short-term incentive awards earned by the named executive officers.
The Short-Term Plan award opportunities for 2016 were based primarily on achieving
specific goals under three Company-wide financial and operating performance measures: adjusted earnings per share (EPS), total revenue and free cash flow.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Why these performance measures?
The Committee selected adjusted EPS, free cash flow and total revenue to reflect Verizons
strategic goals of encouraging profitable operations, efficient use of capital and overall growth. The Committee also selected a diversity and sustainability metric to reflect Verizons commitment to promoting diversity among our employees and
our business partners, and to reducing the environmental impact of our operations.
|
|
|
To better align with Verizons strategic plan, the Committee adjusted the weightings of the financial measures from 2015 by
increasing the weighting of total revenue by 5% and by decreasing the weighting of adjusted EPS by 5%. The Committee made this adjustment to further emphasize revenue generation and our goal of driving growth in 2016.
|
|
|
36
|
|
|
Verizon
2017 Proxy Statement
|
Compensation Discussion and
Analysis
|
2016 short-term incentive compensation
The 2016 performance measures, along with the weighting ascribed to each, are shown below as a percentage of the total
Short-Term Plan award opportunity at target level performance.
|
|
|
|
|
The Committee believes that these performance measures are appropriate to
motivate Verizons executives to achieve outstanding short-term results and, at the same time, help build long-term value for shareholders. The 2016 measures and related targets approved by the Committee are described in detail
below.
|
|
|
|
|
|
Adjusted EPS
Target range: $3.90 to $3.99
The Committee views adjusted EPS as an important indicator of Verizons success in delivering shareholder value. The Committee assigns the greatest weight to
adjusted EPS in determining awards under the Short-Term Plan because this measure is broadly used and recognized by investors as a key indicator of ongoing operational performance and profitability. Adjusted EPS excludes
non-operational
items, such as impairments and gains and losses from divestitures, business combinations, changes in accounting principles, the net impact of pension and post-retirement benefit costs, extraordinary
items and restructurings. The Committee believes this measure provides meaningful comparisons of our financial results from period to period and reflects the relative success of the ongoing business.
|
|
|
|
|
Free cash flow
Target range: $8.4 billion to $9.8 billion
The Committee views free cash flow as another important indicator of Verizons success in delivering shareholder value because it measures our ability to generate
cash from operations and is often used by investors in their equity valuation models. Free cash flow is calculated by subtracting capital expenditures from the total of cash flow from operations and cash flow from financing activities associated
with device payment plan receivable securitizations. The Committee believes this measure is meaningful because Verizons businesses require significant capital investment, and the level of free cash flow reflects how efficiently we are managing
capital expenditures. Free cash flow also indicates the amount of cash Verizon has available to return to shareholders in the form of dividends and to reduce outstanding debt. These are both important goals, especially in light of our commitment to
returning to the credit rating profile the Company maintained before we acquired sole ownership of Verizon Wireless in 2014.
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|
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|
Verizon
2017 Proxy
Statement
|
|
|
37
|
Compensation Discussion and
Analysis
|
2016 short-term incentive compensation
|
|
|
|
|
Total revenue
Target range: $132.1 billion to $133.5 billion
The Committee views total revenue as an important indicator of Verizons growth and success in managing capital investments. This measure also reflects the level
of penetration of Verizons products and services in key markets. In setting the total revenue target range for 2016, the Committee excluded revenue attributable to businesses that were to be divested during that year.
|
|
|
|
|
Diversity and sustainability
Targets: At least 59.4% of U.S.-based workforce comprised of minority and female employees; direct at least $4.6 billion of our overall supplier spending to
minority- and female-owned firms; reduce our carbon intensity by at least 3.5% compared to the prior year
We are committed to promoting a diverse and inclusive culture among our employees and to recognizing and encouraging the contribution of diverse business partners to
our success. We are also committed to reducing the environmental impact of our operations. Our connected solutions empower industries and institutions to transform the way they work by making them more efficient. We have incorporated many of these
solutions in our own business to support our goal of cutting Verizons carbon intensity carbon emissions produced per terabyte of data flowing through our networks in half by 2020.
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|
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|
38
|
|
|
Verizon
2017 Proxy Statement
|
Compensation Discussion and
Analysis
|
2016 short-term incentive compensation
The Short-Term Plan provides for performance measures to be adjusted to exclude the impact of certain types of events
not contemplated at the time the performance measures were set, such as significant transactions, changes in legal or regulatory policy and other
non-operational
items. No awards are paid under the Short-Term
Plan if Verizons return on equity (ROE) for the plan year, based on adjusted net income, does not exceed 8%, even if some or all of the other performance measures are achieved.
2016 Short-Term Plan award
.
After considering the level of performance with respect to each performance measure, and
based on an assessment of the level of achievement of each goal individually and collectively, the Committee determines the final Short-Term Plan award as a percentage of the target level for all employees participating in the Short-Term Plan.
For 2016, this payout percentage was determined to be 80% of the target level. The following table shows the amount of the Short-Term Plan awards paid to each named executive officer.
|
|
|
|
|
Named executive officer
|
|
Actual 2016 Short-Term Plan award ($)
|
|
Mr. McAdam
|
|
|
3,200,000
|
|
Mr. Ellis*
|
|
|
410,000
|
|
Mr. Stratton
|
|
|
1,080,000
|
|
Ms. Walden
|
|
|
1,080,000
|
|
Mr. Reed
|
|
|
960,000
|
|
Mr. Shammo
|
|
|
1,110,000
|
|
*
|
Reflects Mr. Ellis total award payout for 2016 after giving effect to the prorated increase to his target award percentage in November 2016.
|
|
|
|
Verizon
2017 Proxy
Statement
|
|
|
39
|
Compensation Discussion and
Analysis
|
Long-term incentive compensation
Long-term incentive compensation
The Verizon Long-Term Plan is intended to align executives and shareholders interests and to reward participants for creating long-term shareholder value.
The Committee determined that a three-year performance cycle is appropriate for the Long-Term Plan awards because a multi-year performance cycle enables the Committee to meaningfully evaluate the execution of long-term strategies and the effect on
shareholder value.
Consistent with past practice, Long-Term Plan awards are made in PSUs and RSUs. The value of each PSU or RSU is equal to the value of one share
of Verizon common stock. The Committee establishes an executives Long-Term Plan award opportunity as a percentage of base salary and determines the number of PSUs and RSUs to be awarded based on the stock price on the grant date. The Committee
assumes each executive will earn 100% of the PSUs and RSUs awarded for purposes of determining the total compensation opportunity. PSUs and RSUs accrue dividend equivalents that are deemed to be reinvested in PSUs and RSUs, respectively. These
dividend equivalents are paid only to the extent that the related PSUs and RSUs are actually earned.
The number of PSUs actually earned and paid is determined
based upon Verizons achievement of
pre-established
performance targets over the three-year performance cycle, and the ultimate value of each PSU is based on the closing price of Verizons common
stock on the last trading day of the performance cycle. Because the value of PSUs is linked to both stock price and performance targets, PSUs provide a strong incentive to executives to deliver value to Verizons shareholders. RSUs also provide
a performance link as the value of the award depends on Verizons stock price. Both PSUs and RSUs provide a retention incentive by requiring the executive to remain employed with Verizon through the end of the three-year award cycle, subject to
certain qualifying separations.
As in prior award cycles, the 2016 PSUs are payable in cash and the 2016 RSUs are payable in Verizon shares. The Committee believes
this mix appropriately balances the potential shareholder dilution from paying awards in shares and cash flow considerations. In addition, paying the 2016 RSU awards in shares is consistent with Verizons policy of requiring a significant level
of equity ownership by our named executive officers.
2016 Long-Term Plan award opportunities
The Long-Term Plan award is intended to drive our executives to deliver superior TSR performance and create free cash flow, and to encourage retention among our
highly-qualified team. To that end, consistent with past practice, each of the named executive officers received 60% of their 2016 Long-Term Plan award in the form of PSUs and 40% in the form of RSUs.
Two-thirds
of the PSUs are eligible to vest based on Verizons relative TSR, and
one-third
is eligible to vest based on Verizons cumulative free cash flow.
|
|
|
40
|
|
|
Verizon
2017 Proxy Statement
|
Compensation Discussion and
Analysis
|
Long-term incentive compensation
|
|
|
|
|
|
|
|
|
|
|
Why these performance measures?
Relative TSR.
The Committee believes Verizons TSR as compared to the TSR of the
companies in the Related Dow Peers is a critical indicator of our success because it measures our performance in returning value to our shareholders in comparison to alternative investments our shareholders could have made.
Free Cash Flow.
The Committee views free cash flow as an important indicator of our success
because it measures our ability to generate cash from operations, which may be reinvested in our business, used to make acquisitions or pay outstanding debt, or returned to shareholders in the form of dividends or through share repurchases.
|
The 2016 target award opportunities for each of the named executive officers are shown in the table below. For the named executive
officers other than Mr. Ellis, target award opportunities, expressed as a percentage of base salary, did not change for 2016. The dollar value of the 2016 target award opportunities for Mr. Stratton, Ms. Walden, Mr. Reed and
Mr. Shammo increased from 2015 solely as a result of the base salary increases described on page 35. The dollar value of Mr. McAdams 2016 target award opportunity did not change from 2015 because he did not receive a base salary
increase in 2016. When Mr. Ellis was promoted to Chief Financial Officer in November 2016, his target award opportunity was increased from 300% to 500% of his base salary on a prorated basis, effective November 2016. To reflect this increase,
Mr. Ellis received a prorated incremental long-term incentive award in November 2016.
The Committee sets the award levels to provide a total compensation
opportunity consistent with the Companys overall compensation philosophy as described above, while maintaining a compensation mix in which each executives target annual Long-Term Plan award opportunity represents approximately 70% of
that executives compensation opportunity. The target award opportunity for an executive is allocated between PSUs and RSUs as noted above, and the target award opportunity allocated to each type of award is converted into a target number of
units using the closing price of Verizons common stock on the grant date.
The following table shows the target value of the 2016 Long-Term Plan awards
granted to the named executive officers.
2016 Long-Term Plan target award opportunity
|
|
|
|
|
|
|
|
|
Named executive officer
|
|
As a percentage of base salary
|
|
|
As a dollar value
|
|
Mr. McAdam
|
|
|
750%
|
|
|
|
$12,000,000
|
|
Mr. Ellis*
|
|
|
500%*
|
|
|
|
$1,708,333*
|
|
Mr. Stratton
|
|
|
525%
|
|
|
|
$4,725,000
|
|
Ms. Walden
|
|
|
500%
|
|
|
|
$4,500,000
|
|
Mr. Reed
|
|
|
500%
|
|
|
|
$4,000,000
|
|
Mr. Shammo
|
|
|
525%
|
|
|
|
$4,856,250
|
|
*
|
Mr. Ellis target award opportunity was 300% of his base salary prior to November 2016. The dollar value for Mr. Ellis reflects the total target award opportunity for 2016 after giving effect to the
prorated incremental award granted in connection with the increase to his target award percentage in November 2016.
|
|
|
|
Verizon
2017 Proxy
Statement
|
|
|
41
|
Compensation Discussion and
Analysis
|
Long-term incentive compensation
Terms of 2016 PSU awards
Total Shareholder Return metric
.
Two-thirds
of the PSUs will vest based on relative TSR performance (TSR PSUs). The
accompanying chart shows the percentage of the TSR PSUs awarded for the 2016-2018 performance cycle that will vest based on Verizons TSR position compared with the companies in the Related Dow Peers as constituted on the date the awards were
granted. Verizons TSR during the performance cycle must rank at least 15
th
the 59
th
percentile among the Related Dow Peers
for 100% of the target number of TSR PSUs to vest, meaning Verizon must achieve above median TSR PSU performance for target vesting. The maximum number of TSR PSUs (200% of target) will vest only if Verizons TSR during the
three-year
performance cycle ranks among the top four companies in the Related Dow Peers the 91
st
percentile or higher. If Verizons TSR during the
three-year performance cycle ranks below 25
th
approximately the 29
th
percentile of the companies in the Related Dow Peers, none
of the TSR PSUs will vest.
Free Cash Flow metric
.
One-third
of the PSUs will vest based on Verizons cumulative
free cash flow (FCF PSUs). The percentage of the FCF PSUs awarded for the
2016-2018
performance cycle that will vest is based on the extent to which Verizons cumulative FCF over the performance cycle
meets or exceeds the cumulative FCF performance levels set by the Committee at the beginning of the performance cycle. FCF is calculated by subtracting capital expenditures from the total of cash flow from operations and cash flow from financing
activities attributable to device payment plan receivable securitizations, and is subject to adjustment to eliminate the financial impact of significant transactions, changes in legal or regulatory policy and other extraordinary items.
The cumulative FCF target for the 2016-2018 performance cycle was set at a level the Committee believes is attainable, but challenging in light of the business
environment. The number of FCF PSUs that will vest ranges from 0%, if actual performance is below the threshold level, to 200%, if actual performance is at or above the maximum cumulative FCF level. The number of FCF PSUs that will vest in between
identified performance levels will be determined by linear interpolation between vesting percentage levels.
TSR PSU vesting by
performance level
|
|
|
|
|
|
|
|
|
Verizons TSR rank
among
Related Dow Peers
|
|
Percent of TSR
PSUs that vest
|
|
|
|
|
1
st
|
|
|
200%
|
|
|
|
|
|
2
nd
|
|
|
200%
|
|
|
|
|
|
3
rd
|
|
|
200%
|
|
|
|
|
|
4
th
|
|
|
200%
|
|
|
|
|
|
5
th
|
|
|
172%
|
|
|
|
|
|
6
th
|
|
|
165%
|
|
|
|
|
|
7
th
|
|
|
158%
|
|
|
|
|
|
8
th
|
|
|
151%
|
|
|
|
|
|
9
th
|
|
|
144%
|
|
|
|
|
|
10
th
|
|
|
137%
|
|
|
|
|
|
11
th
|
|
|
130%
|
|
|
|
|
|
12
th
|
|
|
123%
|
|
|
|
|
|
13
th
|
|
|
116%
|
|
|
|
|
|
14
th
|
|
|
109%
|
|
|
|
|
|
15
th
|
|
|
102%
|
|
|
|
|
|
16
th
|
|
|
95%
|
|
|
17
th
|
|
|
88%
|
|
|
18
th
(median)
|
|
|
81%
|
|
|
19
th
|
|
|
74%
|
|
|
20
th
|
|
|
67%
|
|
|
21
st
|
|
|
60%
|
|
|
|
|
|
22
nd
|
|
|
53%
|
|
|
|
|
|
23
rd
|
|
|
46%
|
|
|
|
|
|
24
th
|
|
|
39%
|
|
|
|
|
|
25
th
|
|
|
32%
|
|
|
|
|
|
26
th
|
|
|
0%
|
|
|
|
|
|
27
th
|
|
|
0%
|
|
|
|
|
|
28
th
|
|
|
0%
|
|
|
|
|
|
29
th
|
|
|
0%
|
|
|
|
|
|
30
th
|
|
|
0%
|
|
|
|
|
|
31
st
|
|
|
0%
|
|
|
|
|
|
32
nd
|
|
|
0%
|
|
|
|
|
|
33
rd
|
|
|
0%
|
|
|
|
|
|
34
th
|
|
|
0%
|
|
|
|
|
|
35
th
|
|
|
0%
|
|
|
|
|
|
|
|
|
42
|
|
|
Verizon
2017 Proxy Statement
|
Compensation Discussion and
Analysis
|
Long-term incentive compensation
2014 PSU awards earned in 2016
With respect to the PSUs awarded in 2014, the Committee determined the number of PSUs that vested for a participant based on the level of achievement of the two
performance metrics over the three-year performance cycle:
2014-2016 TSR PSUs.
Two-thirds
of the PSUs awarded
were eligible to vest based on Verizons TSR ranking for the 2014-2016 performance cycle relative to the Related Dow Peers as constituted on the date the award was granted. The percentage of TSR PSUs awarded for the 2014-2016 performance cycle
that would vest at each level of Verizons relative TSR positioning was identical to the percentage at each performance level for the 2016-2018 grant shown on the prior page. (For the 20142016 grant, there were 34 companies in the Related
Dow Peers, including Verizon, compared with 35 for the 2016-2018 grant.)
Over the three-year performance cycle ending December 31, 2016, Verizons TSR
ranked 22
nd
among the Related Dow Peers, resulting in a vesting percentage of 53% for the TSR PSUs.
2014-2016 FCF PSUs.
One-third
of the PSUs awarded was eligible to vest based on Verizons cumulative free cash flow
over the 2014-2016 performance cycle compared to the performance targets set by the Committee at the beginning of the three-year cycle. The following shows the percentage of FCF PSUs awarded that would vest based on Verizons cumulative free
cash flow over the 2014-2016 performance cycle at different performance levels.
|
|
|
|
|
Verizons cumulative free cash flow (in billions)
|
|
Percentage of awarded FCF PSUs that vest
1
|
|
Greater than $51.0
|
|
|
200%
|
|
$47.0
|
|
|
150%
|
|
$44.0
|
|
|
100%
|
|
$37.0
|
|
|
50%
|
|
Less than $37.0
|
|
|
0%
|
|
1
|
For achievement between the stated levels, vesting is determined by linear interpolation.
|
At the time the 2014-2016
award was granted, the Committee provided for free cash flow to be determined on an adjusted basis, reflecting reductions and/or increases, to preserve the intended incentives by excluding the impact of certain types of events not contemplated by
our financial plan, such as significant transactions, changes in legal or regulatory policy, and other
non-operational
items. In determining Verizons free cash flow over the performance cycle, the
Committee made adjustments for (i) the monetization of the Verizon Wireless cell tower portfolio in March 2015, (ii) the sale of certain properties to Frontier in 2016, and (iii) the cash flows from certain device payment plan receivable
securitizations, which are presented as cash flow from financing activities, as these developments were not contemplated when the FCF PSU targets were set.
These adjustments are set forth in Appendix A. In accordance with this
pre-established
adjustment methodology, the Committee determined that Verizons cumulative free cash flow over the performance cycle was $46.9 billion, which resulted in a vesting percentage of 149%. The
monetization of the Verizon Wireless cell tower portfolio resulted in higher free cash flow than was anticipated at the time the FCF PSU targets were set, so free cash flow was reduced by amounts attributable to that transaction, and the sale of
certain proprieties to Frontier resulted in lower free cash flow than was anticipated at the time the FCF PSU targets were set, so free cash flow was increased by amounts attributable to that transaction. In addition, the treatment of certain device
payment plan receivable securitizations as cash flow from financing activities resulted in lower free cash flow than was anticipated at the time the FCF PSU targets were set, so free cash flow was increased by amounts attributable to these device
payment plan receivable securitizations. These three developments ultimately resulted in a net increase in cumulative free cash flow.
|
|
|
Verizon
2017 Proxy
Statement
|
|
|
43
|
Compensation Discussion and
Analysis
|
Long-term incentive compensation
2014-2016 PSU payout.
As a result of the achievements described above, in the first quarter of 2017 the
Committee approved a payment to all participants in the Long-Term Plan, including the named executive officers, of 85% of the PSUs awarded for the 2014-2016 performance cycle, which represents the weighted average of the two vesting percentages
described above, plus dividend equivalents credited on those vested PSUs.
Mr. McAdams 2011 special
one-time
equity award earned
In connection with Mr. McAdams appointment to CEO effective August 1, 2011, the
Committee recommended, and the independent members of the Board approved, a special
one-time
equity award to Mr. McAdam under the Long-Term Plan to provide an additional incentive to drive performance and
create value for shareholders. The award was granted on August 1, 2011, with 70% of the award opportunity in the form of PSUs and 30% in the form of RSUs.
The
RSUs represented shares of Verizon common stock that would become payable at the end of the five-year performance cycle ending on July 31, 2016, if Mr. McAdam remained employed throughout the performance cycle. The PSUs represented shares
of Verizon common stock that would become payable after the completion of a five-year performance cycle ending on July 31, 2016, provided that the
pre-established
performance criterion was achieved and
Mr. McAdam remained employed throughout the performance cycle. The number of PSUs that were eligible to vest would be determined based on Verizons average annual ROE during the performance cycle. No PSUs would vest unless Verizons
average annual ROE met the minimum threshold percentage of 10%. If Verizons average annual ROE met the target percentage of 15%, 100% of the nominal number of the PSUs granted would vest and a maximum of two times the nominal number of PSUs
granted would vest if Verizons average annual ROE was at least 20% at the conclusion of the performance cycle. If Verizons average annual ROE during the five-year performance cycle was greater than 10% but less than 15%, or was greater
than 15% but less than 20%, the Committee would determine the extent to which the PSUs would vest, provided that the vested percentage must be between 50% and 100% and between 100% and 200%, respectively.
In determining Verizons average annual ROE during the award performance cycle, the Committee made adjustments for the acquisition of sole ownership of Verizon
Wireless in February 2014, as this transaction was not contemplated when the target was set. In accordance with this
pre-established
adjustment methodology, the Committee determined that Verizons average
annual ROE was 21.1% over the five-year performance cycle ending on July 31, 2016. As a result, the Committee recommended, and the independent members of the Board approved, a payment of 200% of the number of PSUs awarded, plus accrued
dividends credited on those PSUs. In addition, the RSUs awarded to Mr. McAdam, plus accrued dividends credited on those RSUs, vested pursuant to the terms of the award. The PSUs and RSUs were paid in shares in accordance with the terms of the
award, and Mr. McAdam is required to hold the shares he received (net of tax withholding) for at least two years following the vesting date unless he dies or becomes disabled.
Other elements of the compensation program
Verizon also provides the named
executive officers with limited additional benefits as generally described below, which are subject to applicable taxes. No named executive officer is eligible for a tax
gross-up
payment in connection with any
of these benefits, including with respect to excise tax liability arising from any Internal Revenue Code Section 280G excess parachute payments.
Personal benefits
Transportation.
Verizon provides limited aircraft and ground transportation benefits to enhance the safety
and security of certain named executive officers. These transportation benefits also serve business purposes, such as allowing an executive to attend to confidential business matters while in transit.
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44
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2017 Proxy Statement
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Compensation Discussion and
Analysis
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Other elements of the compensation program
Executive life insurance.
Verizon offers the named executive officers and other executives the opportunity to
participate in an executive life insurance program in lieu of participating in our basic and supplemental life insurance programs. The executives who elect to participate in the executive life insurance program own the life insurance policy, and
Verizon provides an annual cash payment to defray a portion of the annual premiums.
Financial planning.
Verizon provides a voluntary Company-sponsored
financial planning benefit program for the named executive officers and other executives. If an executive participates in the program, the cost of the financial planning benefit is included in the executives income.
For additional information on these benefits, see footnote 4 to the Summary compensation table on page 50.
Retirement benefits
Over ten years ago, the
Committee determined that guaranteed pay in the form of defined benefit pension and supplemental executive retirement benefits was not consistent with Verizons
pay-for-performance
culture. Accordingly, effective June 30, 2006, Verizon froze all future pension accruals under its management
tax-qualified
and supplemental defined benefit retirement plans. These legacy retirement benefits that were previously provided to certain named executive officers are described in more detail under the
section titled Pension plans beginning on page 54. In addition, effective June 30, 2006, the Committee froze eligibility for
Verizon-subsidized
retiree medical benefits under its legacy
broad-based Wireline retiree medical plans, which provide a capped partial subsidy towards the cost of medical benefits to certain Verizon employees who met the eligibility requirements for the benefit. None of Verizons named executive
officers other than Mr. Reed are eligible for
Verizon-subsidized
retiree medical benefits.
During 2016, all of
Verizons named executive officers were eligible to participate in Verizons
tax-qualified
defined contribution savings plan, the Verizon Management Savings Plan, referred to as the Savings Plan, and
Verizons nonqualified defined contribution savings plan, the Verizon Executive Deferral Plan, referred to as the Deferral Plan. The named executive officers participate in these plans on the same terms as other participants in the plans. Under
the Savings Plan, participants may defer eligible pay, which includes base salary and short-term incentive, up to certain compensation limits imposed by the Internal Revenue Code, and Verizon provides a matching contribution equal to
100% of the first 6% of eligible pay deferred. The Deferral Plan is designed to restore benefits that are limited or cut back under the Savings Plan due to the Internal Revenue Code limits. Accordingly, under the Deferral Plan a
participant may elect to defer his or her base pay and short-term incentive that could not be deferred into the Savings Plan due to the Internal Revenue Code limits. Verizon provides the same matching contribution on these deferred amounts as the
participant would have received if such amounts had been permitted to be deferred into the Savings Plan. The Deferral Plan also permits participants to defer long-term incentive compensation, but these deferrals are not eligible for Company matching
contributions. All participants in both the Savings Plan and the Deferral Plan are eligible for an additional discretionary profit-sharing contribution of up to 3% of eligible pay.
Severance and change in control benefits
The
Committee believes that maintaining a competitive level of separation benefits is appropriate as part of an overall program designed to attract, retain and motivate the highest-quality management team. However, the Committee does not believe that
named executive officers should be entitled to receive cash severance benefits merely because a change in control occurs. Therefore, the payment of cash severance benefits is triggered only by an actual or constructive termination of employment.
Verizon was not a party to any employment agreement with any of the named executive officers in 2016. All senior managers (including all named executive officers
except Mr. McAdam) are eligible to participate in the Verizon Senior Manager Severance Plan, which provides certain separation benefits to participants whose employment is involuntarily terminated without cause. Mr. McAdam is not eligible
to participate in the Senior Manager Severance Plan and is not entitled to receive any cash severance benefits upon his separation from the Company.
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2017 Proxy
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45
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Compensation Discussion and
Analysis
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Other elements of the compensation program
The Senior Manager Severance Plan is generally consistent with the terms and conditions of Verizons broad-based
severance plan for management employees other than senior managers. Under the Senior Manager Severance Plan, if a participant has been involuntarily terminated without cause (or, in the case of a named executive officer, if the independent members
of the Board determine that there has been a qualifying separation), the participant is eligible to receive a
lump-sum
cash separation payment equal to a multiple of his or her base salary plus target
short-term incentive opportunity, along with continuing medical coverage for the applicable severance period. To the extent that a senior manager is eligible for severance benefits under any other arrangement, that person may not receive any
duplicative benefits under the Senior Manager Severance Plan. The Senior Manager Severance Plan does not provide for any severance benefits based upon a change in control of the Company.
Under the Senior Manager Severance Plan, each named executive officer (other than Mr. McAdam) is eligible to receive a cash separation payment equal to two times
the sum of his or her base salary and target short-term incentive opportunity. To be eligible for any severance benefits, a participant must execute a release of claims against Verizon in the form satisfactory to Verizon and agree not to compete or
interfere with any Verizon business for a period of one year after separation.
Mr. Shammo retired from Verizon effective December 31, 2016.
Mr. Shammo was not entitled to separation benefits under the Senior Manager Severance Plan, but he was eligible for certain other benefits as a retiree, which are described in more detail on page 62.
Consistent with the Committees belief that named executive officers should not receive cash severance benefits merely because a change in control occurs, the
Long-Term Plan does not allow single-trigger accelerated vesting and payment of outstanding awards upon a change in control. Instead, the Long-Term Plan requires a double trigger. Specifically, if, in the 12 months following
a change in control that participants employment is terminated without cause, all then-unvested PSUs will fully vest at the target level performance, all then-unvested RSUs will fully vest, and PSUs and RSUs (including accrued dividend
equivalents) will become payable on the regularly scheduled payment date after the end of the applicable award cycle.
Other compensation policies
Stock ownership guidelines
To further align the
interests of Verizons management with those of our shareholders, the Committee has approved guidelines that require each named executive officer and other executives to maintain certain stock ownership levels within designated periods of
assuming their leadership roles.
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The CEO is required to maintain share ownership equal to at least seven times base salary.
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Other named executive officers are required to maintain share ownership equal to at least four times base salary.
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Executives are prohibited from hedging, short-selling or engaging in any financial activity that would allow them to benefit from a decline in Verizons stock price.
|
In determining whether an executive meets the required ownership level, the calculation includes any shares held by the executive directly or through a broker, shares
held through the Verizon
tax-qualified
savings plan or the Verizon nonqualified savings plan and other deferred compensation plans and arrangements that are valued by reference to Verizons stock. The
calculation does not include any unvested PSUs or RSUs. Each of the named executive officers is in compliance with the stock ownership guidelines. In addition, none of the named executive officers engaged in any pledging transaction with respect to
shares of Verizons stock.
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46
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Verizon
2017 Proxy Statement
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Compensation Discussion and
Analysis
|
Other compensation policies
Recovery of incentive payments (clawbacks)
The Committee believes it is appropriate to hold executives accountable for actions or omissions that result in significant reputational or financial harm to the
Company. Accordingly, the Committee has adopted a policy that enables Verizon to cancel or claw back incentive compensation from any senior executive who has engaged in willful misconduct in the performance of the executives duties
that results in significant reputational or financial harm to Verizon. In addition, all of Verizons employees who receive equity grants under Verizons Long-Term Plan are subject to an additional clawback policy that requires forfeiture
or cancellation of incentive compensation (both short-term and long-term) if the Committee determines that Verizon was required to materially restate its financial results because of the employees willful misconduct or gross negligence. The
Committee reviews these policies periodically.
Shareholder approval of certain severance arrangements
The Committee has a policy of seeking shareholder approval or ratification of any new employment or severance agreement with an executive officer that provides for a
total cash value severance payment exceeding 2.99 times the sum of the executives base salary plus Short-Term Plan target opportunity. The policy defines severance pay broadly to include payments for any consulting services, payments to
secure a
non-compete
agreement, payments to settle any litigation or claim, payments to offset tax liabilities, payments or benefits that are not generally available to similarly situated management
employees and payments in excess of, or outside, the terms of a Verizon plan or policy.
Tax and accounting considerations
Federal income tax law generally prohibits a publicly-held company from deducting compensation paid to a named executive officer (other than a chief financial officer)
that exceeds $1 million during the tax year unless it is based upon attaining
pre-established
performance measures that are set by the companys compensation committee under a plan approved by the
companys shareholders. The Committee has the flexibility to take any compensation-related actions that it determines are in the best interests of Verizon and our shareholders, including determining when to request shareholder approval of
incentive plans and when to award compensation that may not qualify for a tax deduction. Compensation paid to the named executive officers under the Short-Term Plan, as well as the PSUs awarded under the Long-Term Plan, are generally intended to
meet the performance-based exception for deductibility under the tax laws. However, these rules impose a number of requirements and are subject to change, sometimes with retroactive effect. There can be no assurance that any compensation will in
fact be deductible.
The Committee also considers the effect of certain accounting rules that apply to the various aspects of the compensation program for our named
executive officers. The Committee reviews potential accounting effects in determining whether its compensation actions are in the best interests of Verizon and our shareholders. The Committee has been advised by management that the impact of the
variable accounting treatment required for long-term incentive awards payable in cash (as opposed to fixed accounting treatment for awards that are payable in shares) will depend on future stock performance.
Committee actions taken after fiscal year 2016
The Committee approved a
special equity award for Mr. Stratton for purposes of retention. The award is 100% performance-based, and the final payout of the award is predicated on driving return on equity, which is linked to shareholder value creation. The award was granted
on March 14, 2017, with a grant date fair value of approximately $6 million.
Mr. Strattons special award was authorized by the Committee under the terms and
conditions of the 2009 Long-Term Plan, with 100% of the award opportunity in the form of PSUs. The PSUs represent shares of Verizon stock that may become payable after the completion of a three-year award period ending on March 13, 2020, provided
that the pre-established performance criterion is achieved and Mr. Stratton remains actively employed throughout the award period. The percentage of PSUs granted that will vest at the end of the
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Verizon
2017 Proxy
Statement
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47
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Compensation Discussion and
Analysis
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Committee actions taken after fiscal year 2016
three-year
award period will be determined based on Verizons average annual ROE during the three-year period beginning January 1, 2017 and ending
December 31, 2019. No PSUs will vest unless Verizons three-year average ROE meets a minimum threshold percentage of 30%. If Verizons three-year average ROE meets the target percentage of 45%, 100% of the PSUs granted will vest. If
Verizons three-year average ROE is at least 60%, a maximum of 150% of the PSUs granted will vest. If Verizons three-year average ROE is greater than 30% but less than 45%, the percentage of PSUs that will vest will be between 50% and
100% on an interpolated basis, and if Verizons three-year average ROE is greater than 45% but less than 60%, the percentage of PSUs that will vest will be between 100% and 150% on an interpolated basis.
The PSUs that vest at the end of the three-year award period ending March 13, 2020, including accrued dividends on the vested portion of the grant, will be settled in
shares of Verizon stock. The award agreement requires Mr. Stratton to hold such shares (net of withholding taxes) for at least one year following the vesting date unless he dies or becomes disabled.
Compensation Committee Report
The Human Resources Committee has reviewed and discussed the Compensation Discussion and Analysis with management. Based on such review and discussions, the Committee
recommended to the Board of Directors, and the Board has approved, the inclusion of the Compensation Discussion and Analysis in this proxy statement and Verizons Annual Report on Form
10-K.
Respectfully submitted,
The Human Resources Committee
Clarence Otis, Jr., Chair
Richard Carrión
Melanie Healey
Rodney Slater
Gregory Wasson
March 3, 2017
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48
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Verizon
2017 Proxy Statement
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Compensation Tables
Summary compensation
The following table provides information about the
compensation paid to each of our named executive officers in 2014, 2015 and 2016.
Summary compensation table
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Name and Principal Position
(a)
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Year
(b)
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Salary
($) (c)
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Bonus
($) (d)
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Stock
Awards
1
($) (e)
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Option
Awards
($) (f)
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Non-Equity
Incentive Plan
Compensation
2
($) (g)
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Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
3
($) (h)
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All Other
Compensation
4
($) (i)
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Total
($) (j)
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Lowell McAdam
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2016
|
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1,600,000
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0
|
|
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12,000,077
|
|
|
|
0
|
|
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|
3,200,000
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233,155
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641,347
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17,674,579
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Chairman and
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2015
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1,661,538
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0
|
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12,000,065
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|
|
|
0
|
|
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|
4,000,000
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83,092
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|
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598,965
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18,343,660
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Chief Executive Officer
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2014
|
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1,580,769
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0
|
|
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12,000,052
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|
|
|
0
|
|
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3,800,000
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75,647
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850,041
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18,306,509
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Matthew Ellis
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2016
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488,462
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0
|
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1,708,468
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|
|
|
0
|
|
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410,000
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1,291
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89,138
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2,697,359
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Executive Vice President
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and Chief Financial Officer
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John Stratton
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2016
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896,154
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0
|
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4,725,072
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0
|
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1,080,000
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101,959
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237,424
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7,040,609
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Executive Vice President and President of Operations
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2015
2014
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894,231
785,577
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0
0
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4,593,828
4,200,028
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0
0
|
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1,312,500
1,140,000
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52,841
30,023
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203,910
188,530
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7,057,310
6,344,158
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Marni Walden
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2016
|
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896,154
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|
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0
|
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4,500,061
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|
|
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0
|
|
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1,080,000
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55,034
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216,340
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6,747,589
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Executive Vice President and President of Product Innovation
and New Businesses
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2015
|
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894,231
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0
|
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4,375,074
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|
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0
|
|
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1,312,500
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44,907
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174,317
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6,801,029
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Marc Reed
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2016
|
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792,307
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0
|
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4,000,094
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0
|
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960,000
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196,023
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224,745
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6,173,169
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Executive Vice President and Chief Administrative Officer
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Francis Shammo
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2016
|
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921,154
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0
|
|
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4,856,306
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0
|
|
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1,110,000
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82,482
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|
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235,653
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7,205,595
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Former Executive Vice President and Chief Financial Officer
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2015
2014
|
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920,192
815,385
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|
|
0
0
|
|
|
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4,725,031
4,331,294
|
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|
|
0
0
|
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1,350,000
1,175,625
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41,566
12,491
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|
|
|
204,052
163,956
|
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|
7,240,841
6,498,751
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1
|
The amounts in this column reflect the grant date fair value of the PSUs and RSUs computed in accordance with FASB ASC Topic 718 based on the closing price of Verizons common stock on the grant date. The grant
date fair value of PSUs granted to the named executive officers in the designated year as part of Verizons annual long-term incentive award program has been determined based on the vesting of 100% of the nominal PSUs awarded, which is the
performance threshold the Company believed was most likely to be achieved under the grants on the grant date. The following table reflects the grant date fair value of these PSUs, as well as the maximum grant date fair value of these awards based on
the closing price of Verizons common stock on the grant date if, due to the Companys performance during the applicable performance cycle, the PSUs vested at their maximum level.
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Grant Date Fair Value of PSUs
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Maximum Value of PSUs
|
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Name
|
|
2014 ($)
|
|
|
2015 ($)
|
|
|
2016 ($)
|
|
|
2014 ($)
|
|
|
2015 ($)
|
|
|
2016 ($)
|
|
Mr. McAdam
|
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7,200,041
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7,200,039
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7,200,036
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|
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|
14,400,082
|
|
|
|
14,400,078
|
|
|
|
14,400,072
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|
Mr. Ellis
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|
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|
|
|
|
|
|
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1,025,091
|
|
|
|
|
|
|
|
|
|
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|
2,050,182
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|
Mr. Stratton
|
|
|
2,520,026
|
|
|
|
2,756,297
|
|
|
|
2,835,043
|
|
|
|
5,040,052
|
|
|
|
5,512,594
|
|
|
|
5,670,086
|
|
Ms. Walden
|
|
|
|
|
|
|
2,625,044
|
|
|
|
2,700,026
|
|
|
|
|
|
|
|
5,250,088
|
|
|
|
5,400,052
|
|
Mr. Reed
|
|
|
|
|
|
|
|
|
|
|
2,400,046
|
|
|
|
|
|
|
|
|
|
|
|
4,800,092
|
|
Mr. Shammo
|
|
|
2,598,767
|
|
|
|
2,835,009
|
|
|
|
2,913,794
|
|
|
|
5,197,534
|
|
|
|
5,670,018
|
|
|
|
5,827,588
|
|
2
|
The amounts in this column for 2016 reflect the 2016 Short-Term Plan award paid to the named executive officers in February 2017 as described beginning on page 35.
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Verizon
2017 Proxy
Statement
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|
49
|
Compensation Tables
|
Summary compensation
3
|
The amounts in this column for 2016 for Mr. McAdam, Ms. Walden and Mr. Reed reflect the sum of the change in the actuarial present value of the accumulated benefit under the defined benefit plans and the
above-market earnings on amounts held in nonqualified deferred compensation plans as follows: $132,300 and $100,855 for Mr. McAdam, $1,372 and $53,662 for Ms. Walden and $7,803 and $188,220 for Mr. Reed. Messrs. Ellis, Stratton, and
Shammo are not eligible for pension benefits, so amounts shown in this column reflect only above-market earnings for these executives. The above-market earnings consist of earnings on amounts that the individual has elected to invest in a
hypothetical investment option offered to all participants under the nonqualified deferred compensation plans that earns a return rate equal to the long-term, high-grade corporate bond yield average as published by Moodys Investors Services.
The earnings are considered above market in accordance with SEC rules because the interest crediting rate for this investment option (which for 2016 was approximately 4.18% annually) exceeded 120% of the corresponding applicable federal long-term
rate established by the Internal Revenue Service (which for 2016 was 2.25%). Verizons defined benefit plans were frozen as of June 30, 2006, and Verizon stopped all future benefit accruals under these plans as of that date. All accruals
under the Verizon Wireless pension plan were frozen as of December 31, 2006.
|
4
|
The following table provides the detail for 2016 compensation reported in the All Other Compensation column.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Personal Use
of Company
Aircraft
a
($)
|
|
|
Personal Use
of Company
Vehicle
b
($)
|
|
|
Company
Contributions to
the Qualified
Savings Plan ($)
|
|
|
Company
Contributions to
the Nonqualified
Deferral Plan ($)
|
|
|
Company
Contributions to
the Life Insurance
Benefit
c
($)
|
|
|
Other
d
($)
|
|
|
All Other
Compensation
Total ($)
|
|
Mr. McAdam
|
|
|
122,162
|
|
|
|
8,186
|
|
|
|
21,200
|
|
|
|
424,031
|
|
|
|
42,136
|
|
|
|
23,632
|
|
|
|
641,347
|
|
Mr. Ellis
|
|
|
0
|
|
|
|
0
|
|
|
|
21,200
|
|
|
|
45,920
|
|
|
|
9,933
|
|
|
|
12,085
|
|
|
|
89,138
|
|
Mr. Stratton
|
|
|
0
|
|
|
|
0
|
|
|
|
21,200
|
|
|
|
152,004
|
|
|
|
42,971
|
|
|
|
21,249
|
|
|
|
237,424
|
|
Ms. Walden
|
|
|
0
|
|
|
|
0
|
|
|
|
21,200
|
|
|
|
149,154
|
|
|
|
35,986
|
|
|
|
10,000
|
|
|
|
216,340
|
|
Mr. Reed
|
|
|
0
|
|
|
|
0
|
|
|
|
21,200
|
|
|
|
129,173
|
|
|
|
64,372
|
|
|
|
10,000
|
|
|
|
224,745
|
|
Mr. Shammo
|
|
|
0
|
|
|
|
0
|
|
|
|
15,360
|
|
|
|
162,286
|
|
|
|
48,007
|
|
|
|
10,000
|
|
|
|
235,653
|
|
|
a
|
The aggregate incremental cost of the personal use of a Company aircraft is determined by multiplying the total 2016 personal flight hours by the incremental aircraft cost per hour. The incremental aircraft cost per
hour is derived by adding the annual aircraft maintenance costs, fuel costs, aircraft trip expenses and crew trip expenses, and then dividing by the total annual flight hours.
|
|
b
|
The aggregate incremental cost of the personal use of a Company vehicle is determined by (i) calculating the incremental vehicle cost per mile by dividing the annual lease and fuel costs by the total annual miles;
(ii) multiplying the total 2016 personal miles by the incremental vehicle cost per mile; and (iii) adding the incremental driver cost (the 2016 driver hours for personal use multiplied by the drivers hourly rate).
|
|
c
|
Executive life insurance is available to executives on a voluntary basis. Executives who choose to participate in this program are excluded from the basic and supplemental life insurance programs that Verizon provides
to management employees. The executive owns the insurance policy, chooses the level of coverage and is responsible for paying the premiums. However, Verizon pays each executive an amount, shown in this column, which is equal to a portion of the
premium. Executives who choose not to participate in the executive life insurance plan do not receive that payment. For all named executive officers, except Mr. Reed, the executive life insurance policy provides a death benefit equal to two
times the sum of the executives base salary plus his or her Short-Term Plan award opportunity at 67% of target level if the executive dies before a designated date. For Mr. Reed, the executive life insurance policy provides a death
benefit equal to five times the sum of his base salary plus his Short-Term Plan award opportunity at 67% of target level if he dies before a designated date. For all named executive officers, this date is the latest of the participants
retirement date, the date on which the participant reaches age 60 or the fifth anniversary of plan participation.
|
|
d
|
This column represents the total amount of other perquisites and personal benefits provided. These other benefits consist of: (i) for Mr. McAdam, home security services; and (ii) for Mr. Ellis,
financial planning services and relocation benefits; and (iii) for Ms. Walden, Mr. Reed, and Mr. Shammo, financial planning services; and (iv) for Mr. Stratton, financial planning services and personal travel. The Company
provides each of the named executive officers who elect to participate in the financial planning program with a financial planning benefit equal to the Companys payment for the services, up to $10,000. The aggregate incremental cost of
personal travel for Mr. Stratton is equal to the direct expense related to his spouses attendance at a business event at the request of the Company. These expenses include lodging, ground transportation, meals and other travel-related
items.
|
|
|
|
50
|
|
|
Verizon
2017 Proxy Statement
|
Compensation
Tables
|
Plan-based awards
Plan-based awards
The
following table provides information about the 2016 awards granted under the Short-Term Plan and the Long-Term Plan to each named executive officer.
Grants of plan-based awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Future Payouts
Under
Non-Equity
Incentive
Plan Awards
2
|
|
|
|
|
|
Estimated Future
Payouts
Under Equity Incentive
Plan Awards
3
|
|
|
All Other
Stock
Awards:
Number of
Shares
of
Stock or
Units
4
(#) (i)
|
|
|
All Other
Option
Awards:
Number
of
Securities
Underlying
Options
(#) (j)
|
|
|
Exercise
or Base
Price of
Option
Awards
($/Sh) (k)
|
|
|
Grant Date
Fair Value
of Stock
and Option
Awards
5
($) (l)
|
|
Name
(a)
|
|
Type of
Award
1
|
|
|
Grant
Date (b)
|
|
|
Threshold
($) (c)
|
|
|
Target
($) (d)
|
|
|
Maximum
($) (e)
|
|
|
|
|
|
Threshold
(#) (f)
|
|
|
Target
(#) (g)
|
|
|
Maximum
(#) (h)
|
|
|
|
|
|
Mr. McAdam
|
|
|
STP
|
|
|
|
|
|
|
|
2,000,000
|
|
|
|
4,000,000
|
|
|
|
6,000,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PSU
|
|
|
|
3/4/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
52,809
|
|
|
|
138,970
|
|
|
|
277,940
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,200,036
|
|
|
|
|
RSU
|
|
|
|
3/4/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
92,647
|
|
|
|
|
|
|
|
|
|
|
|
4,800,041
|
|
Mr. Ellis
|
|
|
STP
|
|
|
|
|
|
|
|
256,250
|
|
|
|
512,500
|
|
|
|
768,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PSU
|
|
|
|
3/4/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,941
|
|
|
|
15,635
|
|
|
|
31,270
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
810,049
|
|
|
|
|
PSU
|
|
|
|
11/1/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,715
|
|
|
|
4,512
|
|
|
|
9,024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
215,042
|
|
|
|
|
RSU
|
|
|
|
3/4/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,423
|
|
|
|
|
|
|
|
|
|
|
|
540,016
|
|
|
|
|
RSU
|
|
|
|
11/1/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,008
|
|
|
|
|
|
|
|
|
|
|
|
143,361
|
|
Mr. Stratton
|
|
|
STP
|
|
|
|
|
|
|
|
675,000
|
|
|
|
1,350,000
|
|
|
|
2,025,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PSU
|
|
|
|
3/4/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,794
|
|
|
|
54,720
|
|
|
|
109,440
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,835,043
|
|
|
|
|
RSU
|
|
|
|
3/4/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
36,480
|
|
|
|
|
|
|
|
|
|
|
|
1,890,029
|
|
Ms. Walden
|
|
|
STP
|
|
|
|
|
|
|
|
675,000
|
|
|
|
1,350,000
|
|
|
|
2,025,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PSU
|
|
|
|
3/4/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19,803
|
|
|
|
52,114
|
|
|
|
104,228
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,700,026
|
|
|
|
|
RSU
|
|
|
|
3/4/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
34,743
|
|
|
|
|
|
|
|
|
|
|
|
1,800,035
|
|
Mr. Reed
|
|
|
STP
|
|
|
|
|
|
|
|
600,000
|
|
|
|
1,200,000
|
|
|
|
1,800,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PSU
|
|
|
|
3/4/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,603
|
|
|
|
46,324
|
|
|
|
92,648
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,400,046
|
|
|
|
|
RSU
|
|
|
|
3/4/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30,883
|
|
|
|
|
|
|
|
|
|
|
|
1,600,048
|
|
Mr. Shammo
|
|
|
STP
|
|
|
|
|
|
|
|
693,750
|
|
|
|
1,387,500
|
|
|
|
2,081,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PSU
|
|
|
|
3/4/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,371
|
|
|
|
56,240
|
|
|
|
112,480
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,913,794
|
|
|
|
|
RSU
|
|
|
|
3/4/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
37,493
|
|
|
|
|
|
|
|
|
|
|
|
1,942,512
|
|
1
|
These awards are described in the Compensation Discussion and Analysis beginning on page 35.
|
2
|
The actual amount awarded in 2016 was paid in February 2017 and is shown in column (g) of the Summary compensation table on page 49. Mr. Ellis target award opportunity was 90% of his base
salary prior to November 2016. The dollar value shown here reflects Mr. Ellis total target award opportunity for 2016 after giving effect to the prorated increase to his target award percentage in November 2016.
|
3
|
These columns reflect the potential payout range of PSU awards granted in 2016 to our named executive officers, including an incremental award granted to Mr. Ellis in connection with his promotion, in accordance
with the Companys annual long-term incentive award program, as described beginning on page 40. At the conclusion of the three-year performance cycle, payouts can range from 0% to 200% of the target number of units awarded based on
Verizons relative TSR position as compared with the Related Dow Peers and Verizons cumulative free cash flow over the three-year performance cycle as described in more detail beginning on page 42. PSUs and the applicable dividend
equivalents are paid only and to the extent that the applicable performance criteria for the award are achieved at the end of the award cycle. When dividends are distributed to shareholders, dividend equivalents are credited on the PSU awards in an
amount equal to the dollar amount of dividends on the total number of PSUs credited as of the dividend distribution date and divided by the fair market value of the Companys common stock on that date.
|
4
|
This column reflects the RSU awards granted in 2016 to the named executive officers, including an incremental award granted to Mr. Ellis in connection with his promotion, in accordance with the Companys
annual long-term incentive award program. When dividends are distributed to shareholders, dividend equivalents are credited on the RSU awards in an amount equal to the dollar amount of dividends on the total number of RSUs credited as of the
dividend distribution date and divided by the fair market value of the Companys common stock on that date. These dividend equivalents are only distributed to the award holder if and when the award vests.
|
|
|
|
Verizon
2017 Proxy
Statement
|
|
|
51
|
Compensation Tables
|
Plan-based awards
5
|
This column reflects the grant date fair value of each equity award computed in accordance with FASB ASC Topic 718 based on the closing price of Verizons common stock on the grant date. For PSUs, the grant date
fair value has been determined based on the vesting of 100% of the nominal PSUs awarded, which is the performance threshold the Company believed was the most likely to be achieved under the grants.
|
Outstanding equity awards at fiscal
year-end
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
|
|
|
Stock Awards
|
|
Name
(a)
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
(b)
|
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
(c)
|
|
|
Equity
Incentive
Plan Awards:
Number
of
Securities
Underlying
Unexercised
Unearned
Options
(#) (d)
|
|
|
Option
Exercise
Price
($) (e)
|
|
|
Option
Expiration
Date
(f)
|
|
|
|
|
|
Number of
Shares
or
Units of Stock
That Have Not
Vested
1,2
(#) (g)
|
|
|
Market Value
of Shares
or
Units of Stock
That Have Not
Vested
1,3
($) (h)
|
|
|
Equity
Incentive
Plan Awards:
Number
of
Unearned
Shares, Units
or Other Rights
That Have Not
Vested
1,4
(#) (i)
|
|
|
Equity
Incentive
Plan Awards:
Market or
Payout Value
of
Unearned
Shares, Units
or Other Rights
That Have Not
Vested
1,5
($) (j)
|
|
|
Grant Date
|
|
Mr. McAdam
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
107,558
|
|
|
|
5,741,446
|
|
|
|
217,804
|
|
|
|
11,626,378
|
|
|
|
3/6/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
95,785
|
|
|
|
5,113,003
|
|
|
|
126,435
|
|
|
|
6,749,100
|
|
|
|
3/4/2016
|
|
Mr. Ellis
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
11,310
|
|
|
|
603,728
|
|
|
|
0
|
|
|
|
0
|
|
|
|
2/6/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,622
|
|
|
|
567,002
|
|
|
|
21,509
|
|
|
|
1,148,150
|
|
|
|
3/6/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,776
|
|
|
|
575,223
|
|
|
|
14,225
|
|
|
|
759,331
|
|
|
|
3/4/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,008
|
|
|
|
160,567
|
|
|
|
3,971
|
|
|
|
211,972
|
|
|
|
11/1/2016
|
|
Mr. Stratton
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
41,175
|
|
|
|
2,197,922
|
|
|
|
83,379
|
|
|
|
4,450,771
|
|
|
|
3/6/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
37,716
|
|
|
|
2,013,280
|
|
|
|
49,784
|
|
|
|
2,657,470
|
|
|
|
3/4/2016
|
|
Ms. Walden
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
39,214
|
|
|
|
2,093,243
|
|
|
|
79,409
|
|
|
|
4,238,852
|
|
|
|
3/6/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35,920
|
|
|
|
1,917,410
|
|
|
|
47,414
|
|
|
|
2,530,959
|
|
|
|
3/4/2016
|
|
Mr. Reed
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
33,612
|
|
|
|
1,794,209
|
|
|
|
68,064
|
|
|
|
3,633,256
|
|
|
|
3/6/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31,929
|
|
|
|
1,704,370
|
|
|
|
42,146
|
|
|
|
2,249,753
|
|
|
|
3/4/2016
|
|
Mr. Shammo
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
42,351
|
|
|
|
2,260,696
|
|
|
|
85,760
|
|
|
|
4,577,869
|
|
|
|
3/6/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
38,763
|
|
|
|
2,069,169
|
|
|
|
51,167
|
|
|
|
2,731,294
|
|
|
|
3/4/2016
|
|
1
|
In 2014, Mr. Ellis received a special equity award in the form of RSUs, which vested on February 5, 2017, subject to the terms of the award agreement. The award was settled in shares of common stock following the
vesting date. In 2016, Mr. Ellis received an incremental equity award in connection with his appointment as Chief Financial Officer in the form of PSUs and RSUs, which may become payable after the completion of the three-year period ending
December 31, 2018, provided that Mr. Ellis remains continuously employed, subject to the terms of the award agreements.
|
2
|
The annual 2015 and 2016 RSU awards, including Mr. Ellis incremental 2016 RSU award, vest on December 31, 2017 and December 31, 2018 respectively. Mr. Ellis 2014 special RSU award vested
on February 5, 2017. RSUs accrue quarterly dividends that are reinvested into the participants account as additional RSUs and will be included in the final RSU payment if the awards vest. This column includes dividend equivalent units
that have accrued through December 31, 2016.
|
3
|
This column represents the value of the RSU awards listed in column (g) based on a share price of $53.38, the closing price of Verizons common stock on December 30, 2016.
|
4
|
The annual 2015 and 2016 PSU awards, including Mr. Ellis incremental 2016 PSU award, vest on December 31, 2017 and December 31, 2018 respectively. PSUs accrue quarterly dividends that are reinvested
into the participants account as additional PSUs. PSUs and the applicable dividend equivalents are paid if and to the extent that the applicable PSU award vests. As required by SEC rules, the number of units in this column represents the 2015
PSU awards at a 135% vesting percentage and the 2016 PSU awards at a 88% vesting percentage, in each case including accrued dividend equivalents through December 31, 2016 that will be paid to the executives if the awards vest at the indicated
levels.
|
5
|
This column represents the value of the PSU awards listed in column (i) based on a share price of $53.38, the closing price of Verizons common stock on December 30, 2016.
|
|
|
|
52
|
|
|
Verizon
2017 Proxy Statement
|
Compensation
Tables
|
Value realized from stock options and certain stock-based awards
Value realized from stock options and certain stock-based awards
The following table reports the value realized from the vesting of the following stock-based awards for the named executive officers:
|
|
2014 PSUs that vested on December 31, 2016;
|
|
|
2014 RSUs that vested on December 31, 2016;
|
|
|
special
one-time
equity award in the form of PSUs and RSUs granted in 2011 to Mr. McAdam that vested on July 31, 2016; and
|
|
|
special
one-time
equity award in the form of RSUs granted in 2012 to Ms. Walden that vested on December 12, 2016.
|
Based on the Companys relative TSR as compared with the Related Dow Peers and its cumulative free cash flow over the performance period, the Committee approved a
vesting percentage of 85% of the target number of PSU awards granted for the 2014-2016 performance cycle for all participants, including the named executive officers. The values of the 2014 PSU awards upon vesting for Mr. McAdam,
Mr. Ellis, Mr. Stratton, Ms. Walden, Mr. Reed, and Mr. Shammo were $7,929,934, $743,478, $2,775,490, $2,312,900, $2,312,900 and $2,862,213, respectively, and the values of the 2014 RSU awards upon vesting for
Mr. McAdam, Mr. Ellis, Mr. Stratton, Ms. Walden, Mr. Reed, and Mr. Shammo were $6,219,535, $583,141, $2,176,834, $1,814,060, $1,814,060 and $2,244,893, respectively.
Based on Verizons average annual ROE during the performance cycle, the Committee approved a vesting percentage of 200% of the target number of PSU awards granted
for Mr. McAdams special
one-time
equity award granted in 2011. The value of Mr. McAdams PSU award upon vesting was $27,103,276, and the value of his RSU award upon vesting was $5,807,865.
The value of Ms. Waldens special
one-time
equity award upon vesting was $3,467,395.
Option exercises and stock vested table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
|
|
|
Stock Awards
|
|
Name
(a)
|
|
|
|
|
Number of Shares
Acquired on Exercise
(#) (b)
|
|
|
Value Realized on
Exercise
($) (c)
|
|
|
|
|
|
Number of Shares
Acquired on Vesting
1
(#) (d)
|
|
|
Value Realized on
Vesting
1,2
,3
($)
(e)
|
|
Mr. McAdam
|
|
|
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
859,027
|
|
|
|
47,060,610
|
|
Mr. Ellis
|
|
|
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
24,852
|
|
|
|
1,326,619
|
|
Mr. Stratton
|
|
|
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
92,775
|
|
|
|
4,952,324
|
|
Ms. Walden
|
|
|
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
144,303
|
|
|
|
7,594,355
|
|
Mr. Reed
|
|
|
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
77,313
|
|
|
|
4,126,960
|
|
Mr. Shammo
|
|
|
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
95,675
|
|
|
|
5,107,106
|
|
1
|
The amounts include dividend equivalents that were credited on the PSU and RSU awards that vested on December 31, 2016 in accordance with the terms of the awards. For Mr. McAdam, the amount also includes
dividend equivalents that were credited on the PSU and RSU awards that vested on July 31, 2016, and for Ms. Walden, the amount also includes dividend equivalents that were credited on the RSU award that vested on December 12, 2016, in
each case in accordance with the terms of the award. With respect to Mr. McAdams PSU and RSU awards that vested on July 31, 2016, Mr. McAdam is required to hold the shares he acquired upon vesting of those awards (net of tax withholding) for
at least two years following the vesting date unless he dies or becomes disabled.
|
2
|
The amounts in this column represent the number of shares acquired on vesting multiplied by $53.38, the closing price of Verizons common stock on December 30, 2016. For Mr. McAdam, the amount also
includes the number of shares acquired on vesting of his 2011 special one-time equity award multiplied by $55.41, the closing price of Verizons common stock on July 31, 2016 and for Ms. Walden the amount also includes the number of
shares acquired on vesting of her special 2012 RSU award multiplied by $51.76, the closing price of Verizons common stock on December 12, 2016.
|
3
|
The amounts in this column include $198,993 for Mr. Ellis that was deferred under the Verizon Executive Deferral Plan in 2017 when the amounts would have otherwise been paid.
|
|
|
|
Verizon
2017 Proxy
Statement
|
|
|
53
|
Compensation Tables
|
Pension plans
Pension plans
Effective
June 30, 2006, Verizon froze all future pension accruals under its management
tax-qualified
and nonqualified defined benefit pension plans. All accruals under the Verizon Wireless defined benefit
retirement plan
(tax-qualified
and nonqualified) were also frozen as of December 31, 2006. Each of the named executive officers other than Messrs. Ellis, Stratton and Shammo is eligible for a frozen
pension benefit.
Verizon Management Pension Plan and Verizon Excess Pension Plan.
The Verizon Management Pension Plan is a
tax-qualified
defined benefit pension plan and the Verizon Excess Pension Plan is a nonqualified defined benefit pension plan. Mr. Reed is eligible for benefits under these plans. Mr. McAdam and
Ms. Walden are not eligible for benefits under either of these plans because they were employed by Verizon Wireless prior to January 1, 2007. Under the Verizon Management Pension Plan and the Verizon Excess Pension Plan, the normal
retirement age is age 65 with at least 5 years of service and the early retirement age for unreduced benefits is age 55 with 15 or more years of service, and total age plus years of service equal to at least 75. Mr. Reed is eligible for early
retirement benefits under the Verizon Management Pension Plan and the Verizon Excess Pension Plan. Mr. Reeds benefit under the Verizon Excess Pension Plan is based on the cash balance formula noted below and he is vested in the benefit.
Until June 30, 2006, eligible participants could earn pension benefits under a cash balance formula that provided for retirement pay credits equal to between
four and seven percent (depending on age and service) of annual eligible pay for each year of service. Under the cash balance formula, a participants account balance is also credited with monthly interest based upon the prevailing market
yields on certain U.S. Treasury obligations. Eligible pay under the Verizon Management Pension Plan consisted of the employees base salary and the Short-Term Plan award, up to the IRS qualified plan compensation limit. Pension benefits for all
eligible pay in excess of the IRS limit were provided under the Verizon Excess Pension Plan based on the cash balance formula. At the time that the
tax-qualified
and nonqualified pension plans were frozen to
future pension accruals on June 30, 2006, plan participants were provided with a
one-time
additional 18 months of benefits as a transition matter.
As a former employee of GTE Wireless Incorporated, Mr. Reed earned a pension benefit under the Verizon Management Pension Plan based on the better of two highest
average pay formulas. The first formula was based on 1.35% of his average annual eligible pay for the five highest consecutive eligible years of service. The second formula was based on eligible pay for the five highest consecutive eligible years of
service and was integrated with social security, with a 1.15% accrual for eligible pay under the social security integration level and a 1.45% accrual above the social security integration level. Both of these formulas were discontinued on
May 31, 2004 for former GTE Wireless Incorporated employees employed by Verizon Wireless. Effective March 28, 2004, Mr. Reed transferred from Verizon Wireless to Verizon, and he continued to earn a pension under the better of
(i) the 1.35% highest average pay formula, (ii) the 1.15%/1.45% integrated highest average pay formula through May 31, 2004 plus a 1.35% highest average pay formula after May 31, 2004 or (iii) the cash balance formula with a
starting balance of $0 effective on Mr. Reeds transfer date. As noted above, accruals under all three formulas were frozen effective June 30, 2006.
On January 1, 2005, Mr. Reed started accruing a benefit under the Verizon Excess Pension Plans cash balance formula. Mr. Reed earned retirement pay
credits equal to 6% for 2005 and 7% for 2006 (based on age and eligible service) of annual eligible pay in excess of the pay cap for each year of service after January 1, 2005, including monthly interest credits. As noted above, accruals under
the nonqualified cash balance formula were frozen effective June 30, 2006.
Verizon Wireless Retirement Plan.
In 2001, Verizon Wireless
consolidated the pension plans of several predecessor companies under the Verizon Wireless Retirement Plan. Mr. McAdam is entitled to both
a tax-qualified
and a nonqualified pension benefit
under this plan, and Ms. Walden is entitled to a
tax-qualified
benefit under this plan.
|
|
|
54
|
|
|
Verizon
2017 Proxy Statement
|
Compensation
Tables
|
Pension plans
Mr. McAdams
tax-qualified
pension benefit was determined under
two formulas: (i) for the period from January 1, 2001 until May 31, 2004, a cash balance formula that provided pay credits equal to two percent of annual eligible pay up to the IRS compensation
limit (under the cash balance formula, a participants account balance is also credited on an ongoing basis with interest credits based upon the
30-year
Treasury bond); and (ii) a
final average pay formula based on 24 years of service multiplied by 1.45% of Mr. McAdams average annual eligible pay for the five final consecutive years for each year of service through the end of 2006. The normal retirement age
under the Verizon Wireless Retirement Plan is 65. The early retirement age (for unreduced benefits) under the plan is 55. Mr. McAdam is eligible for unreduced early retirement benefits under the plan. Mr. McAdams nonqualified plan
benefit was determined using the 1.45% final average pay formula and was calculated based on 10 years of service and only included his eligible pay in excess of the IRS compensation limit through the end of 2006, at which time no further
adjustments to eligible pay were recognized under the plan. For Mr. McAdam, eligible pay consisted of base salary and the Short-Term Plan award. No participant under the plan was eligible for cash balance
credits under the nonqualified portion of the plan.
Ms. Walden has a tax qualified benefit under the Verizon Wireless Retirement Plan that is
determined under one formula: for the period from January 1, 2001 until May 31, 2004, a cash balance formula that provided pay credits equal to two percent of annual eligible pay up to
the IRS compensation limit (under the cash balance formula, a participants account balance is also credited on an ongoing basis with interest credits based upon the
30-year
Treasury
bond).
The following table illustrates the actuarial present value as of December 31, 2016 of pension benefits accumulated by the named executive officers,
other than Messrs. Ellis, Stratton, and Shammo who are not eligible for pension benefits.
Pension benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
(a)
|
|
Plan Name
(b)
|
|
Number of Years
Credited Service
1
(#) (c)
|
|
|
Present Value of
Accumulated Benefit
2
($) (d)
|
|
|
Payments During
Last Fiscal Year
($) (e)
|
|
Mr. McAdam
|
|
Verizon Wireless Retirement Plan Qualified
|
|
|
33
|
|
|
|
1,113,334
|
|
|
|
0
|
|
|
|
Verizon Wireless Retirement Plan Nonqualified
|
|
|
10
|
|
|
|
1,674,225
|
|
|
|
0
|
|
Ms. Walden
|
|
Verizon Wireless Retirement Plan
Qualified
|
|
|
16
|
|
|
|
24,490
|
|
|
|
0
|
|
Mr. Reed
|
|
Verizon Management Pension Plan Qualified
|
|
|
30
|
|
|
|
1,039,518
|
|
|
|
0
|
|
|
|
Verizon Excess Pension Plan Nonqualified
|
|
|
12
|
|
|
|
169,512
|
|
|
|
0
|
|
1
|
The years of credited service for each of Mr. McAdam, Ms. Walden and Mr. Reed with respect to the applicable plan is less than the named executive officers number of actual years of service with the
Company. For Mr. McAdam, the 10 years of credited service represents the period over which he earned a benefit in the nonqualified portion of the Verizon Wireless Pension Plan. Ms. Walden does not have a benefit in the nonqualified plan.
For Mr. Reed, the 12 years of credited service represents the period over which he earned a benefit in the Verizon Excess Pension Plan.
|
2
|
The values are based on the assumptions for the actuarial determination of pension benefits as required by the relevant accounting standards as described in note 10 to the Companys consolidated financial
statements for the year ended December 31, 2016, as included in Verizons 2016 Annual Report. However, in accordance with the requirements for this table, the values are calculated using the executives retirement at the earliest age
at which he or she can retire without having the retirement benefit reduced under the plan.
|
|
|
|
Verizon
2017 Proxy
Statement
|
|
|
55
|
Compensation Tables
|
Defined contribution savings plans
Defined contribution savings plans
The named executive officers are participants in the Companys
tax-qualified
defined contribution savings plan, the Verizon
Management Savings Plan, which is referred to as the Savings Plan, and its nonqualified defined contribution savings plan, the Verizon Executive Deferral Plan, which is referred to as the Deferral Plan. The named executive officers participate in
these plans on the same terms as other participants in these plans.
Under the Savings Plan, participants may defer eligible pay, which includes base
salary and the Short-Term Plan award, up to certain compensation limits imposed by the Internal Revenue Code, and Verizon provides a matching contribution equal to 100% of the first 6% of eligible pay deferred. The Deferral Plan is designed to
restore benefits that are limited or cut back under the Savings Plan. Accordingly, under the Deferral Plan, a participant may elect to defer his or her base pay and Short-Term Plan award that could not be deferred into the Savings Plan due to the
Internal Revenue Code limits. Verizon provides the same matching contribution on these deferred amounts as the participant would have received if such amounts had been permitted to be deferred into the Savings Plan. The Deferral Plan also permits
participants to defer long-term incentive compensation, such as PSUs and RSUs, but these deferrals are not eligible for Company matching contributions. Participants in the Savings Plan and the Deferral Plan are eligible for an additional
discretionary profit-sharing contribution of up to 3% of eligible pay. In determining whether to make a profit-sharing contribution, the Committee uses the same criteria it uses to determine the Short-Term Plan award paid to employees. For 2016, the
discretionary contribution was 1.0%. The named executive officers other than Mr. Ellis were participants in the Verizon Wireless Executive Deferral Plan while they were employed at Verizon Wireless. In April 2014, following Verizons
acquisition of sole ownership of Verizon Wireless, the Verizon Wireless Executive Deferral Plan was merged into the Deferral Plan.
Participants in the Deferral
Plan may elect to invest their deferrals in a hypothetical cash account that earns a return rate equal to the long-term, high-grade corporate bond yield average as published by Moodys Investor Services or in the other hypothetical investment
options available to all participants under the Savings Plan. Participants in the Deferral Plan may generally elect to receive their benefits in a lump sum or installments, commencing on a separation from service or specific date elected by the
participant.
Mr. Reed also has an account balance under the Income Deferral Plan (IDP). The IDP is a nonqualified deferred compensation plan that was the
predecessor to the Deferral Plan. The IDP was amended to freeze the accrual of benefits under the plan as of the close of business on December 31, 2004. Participants in the IDP no longer accrue any additional benefits other than market-based
investment earnings or losses on their individual accounts. No new deferrals were permitted after 2004. Participants retain the ability to invest their frozen accounts in the investment options available under the plan. Participants in the IDP do
not receive matching contribution credits or retirement credits under the plan.
The named executive officers other than Mr. Ellis also have account balances under
the Verizon Wireless Executive Savings Plan (ESP). The ESP is a nonqualified deferred compensation plan that was the predecessor to the Verizon Wireless Executive Deferral Plan. The ESP was amended to freeze the accrual of benefits under the plan as
of the close of business on December 31, 2004. Participants in the ESP no longer accrue any additional benefits other than market-based investment earnings or losses on their individual accounts. No new deferrals were permitted after 2004.
Participants retain the ability to invest their frozen accounts in the investment options available under the ESP. Participants in the ESP do not receive matching contribution credits or retirement credits under the plan.
The Nonqualified deferred compensation table on page 57 shows the 2016 account activity for each named executive officer and includes each
executives contributions, Company matching contributions, earnings, withdrawals and distributions and the aggregate balance of his or her total deferral account as of December 31, 2016.
|
|
|
56
|
|
|
Verizon
2017 Proxy Statement
|
Compensation
Tables
|
Defined contribution savings plans
Nonqualified deferred compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
(a)
|
|
|
|
Executive
Contributions
in Last FY
1
($) (b)
|
|
|
Registrant
Contributions
in Last FY
2
($) (c)
|
|
|
Aggregate
Earnings in
Last FY
3
($) (d)
|
|
|
Aggregate
Withdrawals/
Distributions
4
($) (e)
|
|
|
Aggregate
Balance at
Last FYE
4
($) (f)
|
Mr. McAdam
|
|
Verizon Executive Deferral Plan
|
|
|
320,100
|
|
|
|
424,031
|
|
|
|
982,386
|
|
|
|
0
|
|
|
9,505,720
|
|
Verizon Wireless Executive Savings Plan
|
|
|
0
|
|
|
|
0
|
|
|
|
101,435
|
|
|
|
0
|
|
|
2,480,926
|
Mr. Ellis
|
|
Verizon Executive Deferral Plan
|
|
|
36,358
|
|
|
|
45,920
|
|
|
|
19,641
|
|
|
|
0
|
|
|
225,162
|
Mr. Stratton
|
|
Verizon Executive Deferral Plan
|
|
|
549,029
|
|
|
|
152,004
|
|
|
|
594,861
|
|
|
|
238,034
|
|
|
8,716,922
|
|
Verizon Wireless Executive Savings Plan
|
|
|
0
|
|
|
|
0
|
|
|
|
498,187
|
|
|
|
0
|
|
|
4,295,234
|
Ms. Walden
|
|
Verizon Executive Deferral Plan
|
|
|
116,619
|
|
|
|
149,154
|
|
|
|
647,407
|
|
|
|
0
|
|
|
6,852,119
|
|
Verizon Wireless Executive Savings Plan
|
|
|
0
|
|
|
|
0
|
|
|
|
561
|
|
|
|
0
|
|
|
13,709
|
Mr. Reed
|
|
Verizon Executive Deferral Plan
|
|
|
99,139
|
|
|
|
129,173
|
|
|
|
594,660
|
|
|
|
0
|
|
|
10,708,235
|
|
Verizon Income Deferral Plan
|
|
|
0
|
|
|
|
0
|
|
|
|
158,246
|
|
|
|
0
|
|
|
1,020,730
|
|
Verizon Wireless Executive Savings Plan
|
|
|
0
|
|
|
|
0
|
|
|
|
128,106
|
|
|
|
0
|
|
|
3,117,893
|
Mr. Shammo
|
|
Verizon Executive Deferral Plan
|
|
|
120,369
|
|
|
|
162,286
|
|
|
|
222,955
|
|
|
|
0
|
|
|
4,870,018
|
|
Verizon Wireless Executive Savings Plan
|
|
|
0
|
|
|
|
0
|
|
|
|
156,510
|
|
|
|
0
|
|
|
1,558,195
|
1
|
Of the amounts listed in this column, the following amounts are also included in the Summary compensation table in columns (c) and (j): for Mr. McAdam, $80,100; for Mr. Ellis, $13,408; for
Mr. Stratton, $220,904; for Ms. Walden, $37,869; for Mr. Reed, $31,639; and for Mr. Shammo, $39,369.
|
2
|
The amounts listed in this column are also included in columns (i) and (j) of the Summary compensation table.
|
3
|
Of the amounts listed in this column, the following amounts are also included in the Summary compensation table in columns (h) and (j): for Mr. McAdam, $100,855; for Mr. Ellis, $1,291; for
Mr. Stratton, $101,959; for Ms. Walden, $53,662; for Mr. Reed, $188,220; and for Mr. Shammo, $82,482.
|
4
|
The aggregate amounts shown in columns (e) and (f) include the following amounts that were reported as compensation to the named executive officers in the summary compensation table in Verizons previous proxy
statements:
|
|
|
|
For Mr. McAdam, a total of $4,774,359 was reported (2008 to 2016);
|
|
|
|
For Mr. Stratton, a total of $2,230,815 was reported (2013 to 2016);
|
|
|
|
For Ms. Walden, a total of $227,143 was reported (2016); and
|
|
|
|
For Mr. Shammo, a total of $1,085,550 was reported (2011 to 2016).
|
Potential payments upon termination or
change in control
The following summaries and tables describe and quantify the potential payments and benefits that would be provided to each of our named
executive officers if a termination of employment or change in control of Verizon had occurred at the end of 2016 under Verizons compensation plans and agreements.
Payments made upon termination
Regardless of
the manner in which a named executive officers employment terminates, the executive is entitled to receive amounts earned during the term of employment. This includes amounts accrued and vested under our pension plans and nonqualified deferred
compensation plans, which are reported in the Pension benefits and Nonqualified deferred compensation tables above. Those benefits are not included in the summaries and tables below.
In addition, amounts earned under our 2016 Short-Term Plan awards and amounts earned under our 2014 Long-Term Plan awards are not included in the summaries or tables
below. Amounts earned under our 2016 Short-Term Plan awards are discussed in the Compensation Discussion and Analysis beginning on page 35 and
|
|
|
Verizon
2017 Proxy
Statement
|
|
|
57
|
Compensation Tables
|
Potential payments upon termination or change in control
are reported in the Summary compensation table on page 49. Amounts earned under our 2014 Long-Term Plan awards are discussed in the Compensation Discussion and Analysis beginning on
page 43 and are reported in the Option exercises and stock vested table on page 53. If a named executive officers employment had terminated on December 31, 2016 for any reason other than for cause, the full amount of the 2016
Short-Term Plan award and the full amount of the 2014 Long-Term Plan awards, in each case to the extent earned, would have been payable. These amounts would be determined and payable at the same time as awards are determined and paid to
participating employees generally under those plans. In the event of a termination for cause, no amount would have been payable under these awards.
Potential payments upon qualifying separation or involuntary termination without cause
Mr.
McAdam.
As
Chairman and CEO, Mr. McAdam is not eligible to participate in the Senior Manager Severance Plan described below. Mr. McAdam is also not a party to an employment agreement with Verizon or any other agreement that would provide him
with cash severance benefits in the event his employment is involuntarily terminated by Verizon without cause.
Senior Manager Severance Plan.
Verizon
provides severance benefits to certain employees, including all of the named executive officers other than the Chairman and CEO, under the Senior Manager Severance Plan. Under the plan, a named executive officer is eligible to receive severance
benefits if he or she experiences a qualifying separation from Verizon, which is generally defined as an involuntary termination by Verizon without cause, a voluntary termination by the executive solely due to the executives
refusal to accept a qualifying reclassification or relocation (as those terms are defined in the plan) or a determination by the independent members of the Board that the named executive officer has incurred a qualifying separation. A severance
benefit, if triggered, is payable to an executive only if the executive executes a release of claims against Verizon in the form satisfactory to Verizon and agrees not to compete or interfere with any Verizon business for a period of one year
after termination from employment and always to protect Verizons trade secrets and proprietary information.
If a named executive officer incurs a qualifying
separation under the plan, he or she is eligible to receive the following benefits: (i) a
lump-sum
cash separation payment equal to two times the sum of his or her base salary and target
Short-Term Plan award opportunity; and (ii) continued medical, dental and vision coverage for two years.
In addition, if the executives
qualifying separation occurs prior to the last day of the year, the executive will receive a prorated Short-Term Plan award for the year in which the separation occurs, determined based on the actual level of achievement of the performance criteria
under the Short-Term Plan for the applicable year and payable at the time that awards are payable to participating employees generally under the plan. To the extent that an executive also becomes eligible for severance benefits under any outstanding
agreement, plan or any other arrangement, the executives cash severance payment under the Senior Manager Severance Plan will be reduced on a
dollar-for-dollar
basis by the amount of the severance benefits payable to the executive under such other agreement, plan or arrangement.
Other benefits.
Upon an
involuntary termination of employment without cause, a named executive officer would also be eligible to receive financial planning and outplacement services for one year following termination on the same basis as provided to other senior
executives. However, executives would only be entitled to receive financial planning services if they participate in the program in the year in which their employment terminates. Mr. McAdam did not participate in the financial planning program
in 2016 and, as a result, would not have been entitled to receive financial planning services if his employment had terminated on the last business day of 2016. In addition, under the terms of the executive life insurance plan, each named executive
officer who is retirement eligible upon termination and who continues to pay the annual premiums on the life insurance policy owned by the executive would be eligible to receive an annual payment from Verizon to pay a portion of the annual premium
until the latest of the executives attainment of age 60 or the completion of 5 years of plan
|
|
|
58
|
|
|
Verizon
2017 Proxy Statement
|
Compensation
Tables
|
Potential payments upon termination or change in
control
participation. Retirement eligibility is generally defined as having attained 75 points (age plus years of service) with at least 15 years of service. If the named executive officer is not
retirement eligible upon termination and has not reached plan maturity (age 60 and 5 years of plan participation) upon termination, the executive would be eligible to receive one additional annual payment to pay a portion of the annual premium for
the year following the year in which the executives termination occurs. Mr. McAdam attained plan maturity on December 31, 2014, and he is not entitled to receive any additional payments from Verizon with respect to this benefit
following his termination of employment.
Estimated payments.
The following table shows Verizons estimate of the amount of benefits the named
executive officers, other than Mr. Shammo, would have been entitled to receive had their employment been involuntarily terminated without cause on the last business day of 2016 or had incurred a qualifying separation under the Senior Manager
Severance Plan. The actual payments and benefits that Mr. Shammo became entitled to receive upon his retirement on December 31, 2016, and the estimated payments under the other hypothetical termination scenarios, are discussed under the
heading Retirement of Mr. Shammo beginning on page 62.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Cash Separation
Payment ($)
|
|
|
Continued Health
Benefits
1
($)
|
|
|
Outplacement
Services ($)
|
|
|
Financial
Planning
2
($)
|
|
|
Executive Life
Insurance Benefit
3
($)
|
|
Mr. McAdam
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Mr. Ellis
|
|
|
3,500,000
|
|
|
|
39,794
|
|
|
|
14,500
|
|
|
|
9,500
|
|
|
|
4,495
|
|
Mr. Stratton
|
|
|
4,500,000
|
|
|
|
26,531
|
|
|
|
14,500
|
|
|
|
10,000
|
|
|
|
170,012
|
|
Ms. Walden
|
|
|
4,500,000
|
|
|
|
42,345
|
|
|
|
14,500
|
|
|
|
10,000
|
|
|
|
19,066
|
|
Mr. Reed
|
|
|
4,000,000
|
|
|
|
39,794
|
|
|
|
14,500
|
|
|
|
10,000
|
|
|
|
116,034
|
|
1
|
The amounts reflect Verizons estimated cost of providing medical, dental and vision coverage for two years.
|
2
|
Mr. McAdam did not participate in the financial planning program in 2016 and, as a result, would not have been entitled to receive financial planning services if his employment had terminated on the last business
day of 2016.
|
3
|
If Mr. McAdam had retired on December 31, 2016, he would not have been entitled to receive additional company contributions with respect to this benefit because he reached plan maturity on December 31,
2014.
|
Potential payments upon death, disability or retirement
Under the terms of the executive life insurance plan, in the event of disability or a qualifying retirement, a named executive officer who continues to pay the annual
premiums on the life insurance policy owned by the executive would be eligible to receive an annual payment from Verizon to pay a portion of the annual premium until the latest of the executives attainment of age 60 or the completion of 5
years of plan participation. If the named executive officer dies, his or her beneficiary would be entitled to receive the proceeds of the life insurance policy owned by the executive, payable by the third-party issuer of the policy.
Under the Short-Term Plan, if the named executive officers employment terminates due to death, disability or a qualifying retirement prior to the last day of the
year, the executive would be eligible for a prorated Short-Term Plan award for the year in which the termination date occurred, determined based on the actual level of achievement of the performance criteria under the Short-Term Plan for the
applicable year and payable at the time that awards are generally payable to participating employees under the plan. As described above, if the executives employment terminates on the last day of the year for any reason other than for cause,
the full amount of the Short-Term Plan award, determined based on the actual level of achievement of the performance criteria under the Short-Term Plan for the applicable year, would have been payable.
In addition, upon death, disability or a qualifying retirement, each named executive officer would also be eligible to receive financial planning services for one year
following termination on the same basis as provided to other senior executives, provided that the executive participated in the program in the year in which his or her employment terminates. Upon disability, the named executive officers would also
be eligible for disability benefits under the
tax-qualified
and nonqualified disability plans.
|
|
|
Verizon
2017 Proxy
Statement
|
|
|
59
|
Compensation Tables
|
Potential payments upon termination or change in control
Estimated payments.
The following table shows Verizons estimate of the amount of benefits the named
executive officers, other than Mr. Shammo, would have been entitled to receive had their employment terminated due to death, disability or qualifying retirement on the last business day of 2016. The actual payments and benefits that
Mr. Shammo became entitled to receive upon his retirement on December 31, 2016, and the estimated payments under the other hypothetical termination scenarios, are discussed under the heading Retirement of Mr. Shammo
beginning on page 62.
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Executive Life Insurance Benefit
1
($)
|
|
|
Disability Benefit
2
($)
|
|
|
Financial Planning
3
($)
|
|
Mr. McAdam
|
|
|
|
|
|
|
|
|
|
|
|
|
Death
|
|
|
3,200,000
|
|
|
|
0
|
|
|
|
0
|
|
Disability
|
|
|
0
|
|
|
|
1,029,602
|
|
|
|
0
|
|
Retirement
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Mr. Ellis
|
|
|
|
|
|
|
|
|
|
|
|
|
Death
|
|
|
1,444,000
|
|
|
|
0
|
|
|
|
9,500
|
|
Disability
|
|
|
150,378
|
|
|
|
504,890
|
|
|
|
9,500
|
|
Retirement
4
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Mr. Stratton
|
|
|
|
|
|
|
|
|
|
|
|
|
Death
|
|
|
3,610,000
|
|
|
|
0
|
|
|
|
10,000
|
|
Disability
|
|
|
170,012
|
|
|
|
421,372
|
|
|
|
10,000
|
|
Retirement
|
|
|
170,012
|
|
|
|
0
|
|
|
|
10,000
|
|
Ms. Walden
|
|
|
|
|
|
|
|
|
|
|
|
|
Death
|
|
|
9,025,000
|
|
|
|
0
|
|
|
|
10,000
|
|
Disability
|
|
|
376,556
|
|
|
|
2,180,229
|
|
|
|
10,000
|
|
Retirement
4
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Mr. Reed
|
|
|
|
|
|
|
|
|
|
|
|
|
Death
|
|
|
8,020,000
|
|
|
|
0
|
|
|
|
10,000
|
|
Disability
|
|
|
116,034
|
|
|
|
1,535,152
|
|
|
|
10,000
|
|
Retirement
|
|
|
116,034
|
|
|
|
0
|
|
|
|
10,000
|
|
1
|
In the event of death, the amount represents the proceeds from the life insurance policy owned by the named executive officer, payable by the third-party issuer of the policy. In the event of disability or retirement,
the amount, if any, represents the total amount of annual payments to the named executive officer to pay a portion of the annual premium of the life insurance policy owned by him, provided that the named executive officer continues to pay the annual
premiums pursuant to the terms of the executive life insurance program. If Mr. McAdam had retired on December 31, 2016, he would not have been entitled to receive additional company contributions with respect to this benefit because he
reached plan maturity on December 31, 2014.
|
2
|
Assumes that each named executive officer would be immediately eligible for long-term disability benefits from Verizons qualified and nonqualified disability benefit plans. Messrs. Ellis and Stratton do not
participate in the nonqualified portion of the disability benefit. The assumptions used to calculate the value of the disability benefits include a discount rate of 3.98% and mortality and recovery based on the 1987 National Association of Insurance
Commissioners Group Disability Table. These rates represent the probability of death or recovery between the date of disability and the payment end date. The qualified portion of the disability benefit for Mr. McAdam, Mr. Ellis,
Mr. Stratton, Ms. Walden, and Mr. Reed is estimated at $364,039, $504,890, $421,372, $785,321, and $542,788, respectively, and the nonqualified portion of the disability benefit for Mr. McAdam, Ms. Walden and Mr. Reed
is estimated at $665,563, $1,394,908 and $992,364, respectively. In order to receive the nonqualified portion of the disability benefit, the executive must pay the premium associated with the qualified portion of the benefit.
|
3
|
Mr. McAdam did not participate in the financial planning program in 2016 and, as a result, would not have been entitled to receive financial planning services if his employment had terminated on the last
business day of 2016.
|
4
|
Mr. Ellis and Ms. Walden would not have been entitled to receive executive life insurance benefits or financial planning benefits because they had not fulfilled the eligibility requirements for retirement
under the terms of those programs on the last business day of 2016.
|
|
|
|
60
|
|
|
Verizon
2017 Proxy Statement
|
Compensation
Tables
|
Potential payments upon termination or change in
control
Potential payments upon change in control
Verizon does not maintain any plans or arrangements that provide for any named executive officer to receive cash severance or any other cash payments in connection with
a change in control of Verizon. If the named executive officers employment terminates in connection with or following a change in control, he or she would be eligible for the same benefits, if any, that would become payable to the executive
upon his or her termination under the circumstances as described above. Under the Short-Term Plan, if a change in control occurs, all outstanding awards will vest and become payable on the regularly scheduled payment date.
Treatment of equity awards
As is the case for
all participants under the terms of the Long-Term Plan and the applicable award agreements, upon an involuntary termination of employment without cause, death, disability or qualifying retirement, each named executive officers then unvested
RSUs will vest and be payable on the regularly scheduled payment date after the end of the applicable award cycle and each named executive officers then unvested PSUs will vest and be payable on the regularly scheduled payment date after the
end of the applicable award cycle, but only if and to the extent that the applicable performance criteria for the award are achieved at the end of the applicable award cycle. Under the Long-Term Plan, a qualifying retirement generally means to
retire after having attained at least 15 years of vesting service (as defined under the applicable Verizon
tax-qualified
savings plan) and a combination of age and years of vesting service that equals or
exceeds 75. As of December 31, 2016, Messrs. McAdam, Stratton and Reed were retirement-eligible under the Long-Term Plan.
The payment of PSU and RSU awards
under the Long-Term Plan following an involuntary termination of employment without cause, death, disability or qualifying retirement is conditioned on the participant executing a release of claims against Verizon in the form satisfactory to
Verizon. The grant of each award is conditioned on the participants agreement to certain restrictive covenants including an agreement not to compete or interfere with any Verizon business for a period of one year after termination from
employment (two years for the CEO), and to always protect Verizons trade secrets and proprietary information.
In addition, under the terms of the Long-Term
Plan and the applicable award agreements, if, in the 12 months following a change in control of Verizon, a participants employment is involuntarily terminated without cause, all then-unvested RSUs will vest and be payable on the regularly
scheduled payment date after the end of the applicable award cycle and all then-unvested PSUs will vest at target level performance and be payable on the regularly scheduled payment date after the end of the applicable award cycle.
Under the Long-Term Plan, a change in control of Verizon is generally defined as the occurrence of any of the following:
|
|
Any person becomes a beneficial owner of shares representing twenty percent or more of Verizons outstanding voting stock;
|
|
|
Verizon consummates a merger, consolidation, reorganization or any other business combination; or
|
|
|
The Board adopts resolutions authorizing the liquidation or dissolution, or sale of all or substantially all of the assets, of Verizon.
|
However, a change in control will not occur if:
|
|
The amount of Verizon voting stock outstanding immediately before the transaction represents at least
forty-five
percent of the combined voting power of the corporation that
survives the transaction;
|
|
|
Verizon Directors constitute at least
one-half
of the board of directors of the surviving corporation;
|
|
|
Verizons CEO is the CEO of the surviving corporation; and
|
|
|
The headquarters of the surviving corporation is located in New York, New York.
|
|
|
|
Verizon
2017 Proxy
Statement
|
|
|
61
|
Compensation Tables
|
Potential payments upon termination or change in control
Estimated payments.
The following table shows the estimated value of the awards that the named executive
officers, other than Mr. Shammo, could have received in respect of their outstanding unvested equity awards if any of the following events occurred on the last business day of 2016: (i) a change in control of Verizon without a termination
of employment; (ii) a change in control of Verizon and an involuntary termination of employment without cause; and (iii) a termination of employment as a result of an involuntary termination without cause, qualifying retirement, or death
or disability. The amounts represent the estimated value of the RSU and PSU awards granted in 2015 and 2016, including the incremental award granted to Mr. Ellis in connection with his promotion, and the estimated value of the RSU award granted to
Mr. Ellis in 2014, that would have been payable pursuant to the terms of the award agreements, calculated using the total number of units (including accrued dividends) on the last business day of 2016 and $53.38, Verizons closing stock price
on that date, and for the PSUs, assuming the award would vest at target performance levels. The actual amount payable under these awards can be determined only at the time the awards would be paid. The actual payments and benefits that
Mr. Shammo became entitled to receive upon his retirement on December 31, 2016, and the estimated payments under the other hypothetical termination scenarios, are discussed under the heading Retirement of Mr. Shammo below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Change In Control
Without Termination
($)
|
|
|
Change In Control And
Termination Without Cause
($)
|
|
|
Termination
Without Cause
($)
|
|
|
Retirement
1
($)
|
|
|
Death or Disability
($)
|
|
Mr. McAdam
|
|
|
0
|
|
|
|
27,136,043
|
|
|
|
27,136,043
|
|
|
|
27,136,043
|
|
|
|
27,136,043
|
|
Mr. Ellis
|
|
|
0
|
|
|
|
3,860,709
|
|
|
|
3,860,709
|
|
|
|
0
|
|
|
|
3,860,709
|
|
Mr. Stratton
|
|
|
0
|
|
|
|
10,527,925
|
|
|
|
10,527,925
|
|
|
|
10,527,925
|
|
|
|
10,527,925
|
|
Ms. Walden
|
|
|
0
|
|
|
|
10,026,579
|
|
|
|
10,026,579
|
|
|
|
0
|
|
|
|
10,026,579
|
|
Mr. Reed
|
|
|
0
|
|
|
|
8,746,420
|
|
|
|
8,746,420
|
|
|
|
8,746,420
|
|
|
|
8,746,420
|
|
1
|
Mr. Ellis and Ms. Walden would not have been entitled to receive any amount in respect of their outstanding unvested equity awards upon retirement because they had not met the eligibility requirements for
retirement under the terms of the Long-Term Plan on the last business day of 2016.
|
Retirement of Mr. Shammo
Mr. Shammo retired from the Company on December 31, 2016. The following table sets forth the payments and benefits Mr. Shammo became entitled to receive
upon his retirement.
|
|
|
|
|
|
|
Cash Separation Payment
($)
|
|
Equity
1
($)
|
|
Financial Planning
($)
|
|
Executive Life Insurance Benefit
2
($)
|
0
|
|
10,824,663
|
|
10,000
|
|
148,386
|
1
|
Represents the estimated value of the RSU and PSU awards granted in 2015 and 2016. The value of these awards was calculated using the total number of units (including accrued dividends) on the last business day of 2016
and $53.38, Verizons closing stock price on that date, and, in the case of the PSUs, assuming the awards would vest at target performance levels. These awards will be paid on the regularly scheduled payment date following the end of the
applicable performance period based on the stock price on the last day of the performance period, and in the case of the PSUs, only if and to the extent that the applicable performance criteria have been satisfied.
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2
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Represents the total amount of annual payments to Mr. Shammo to pay a portion of the life insurance policy owned by him, provided that he continues to pay the annual premiums pursuant to the terms of the program.
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Mr. Shammo executed a release of claims satisfactory to Verizon as a condition to the receipt of the foregoing benefits, agreed not to solicit
employees or customers of Verizon for one year following his retirement, agreed not to compete or interfere with any Verizon business for a period of one year after termination from employment, and always to protect Verizons trade secrets and
proprietary information.
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62
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Verizon
2017 Proxy Statement
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Compensation
Tables
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Retirement of Mr. Shammo
SEC rules require that we disclose the hypothetical payments and benefits that Mr. Shammo would have been
entitled to receive if certain events had occurred on December 31, 2016 and Mr. Shammo had not retired on that date, notwithstanding the fact that the events did not occur and Mr. Shammo retired on that date. If on December 31,
2016 there had been a change in control of Verizon without a termination of Mr. Shammos employment, Mr. Shammo would not have been entitled to any payments or benefits. Mr. Shammo would have been entitled to receive a $416,178
disability benefit if he had become disabled on December 31, 2016 and not retired. This assumes that Mr. Shammo would have been immediately eligible for long-term disability benefits from Verizons qualified disability benefit plan
and is based on a discount rate of 3.98% and mortality and recovery based on the 1987 National Association of Insurance Commissioners Group Disability Table, which represent the probability of death or recovery between the date of disability and the
payment end date. Mr. Shammo would have been entitled to receive the same life insurance benefit that he received upon his retirement quantified in the Retirement of Mr. Shammo table on page 62 if his employment had been terminated
without cause following a change in control, or terminated without cause under any other circumstance, or if he had become disabled on December 31, 2016. If he had died on December 31, 2016, Mr. Shammos beneficiaries would have
been entitled to receive $3,710,000 under the life insurance policy owned by him. He would have been entitled to receive the same financial planning benefit that he received upon his retirement quantified in the Retirement of Mr. Shammo
table if his employment had been terminated without cause following a change in control, or terminated without cause under any other circumstance, or if he died or became disabled on December 31, 2016. In addition, if Mr. Shammo had been
terminated without cause following a change in control, had been terminated without cause under any other circumstance, or had he died or become disabled on December 31, 2016, Mr. Shammo would have been entitled to the same treatment of
his equity awards that he received upon his retirement with the same estimated value quantified in the Retirement of Mr. Shammo table and based on the same assumptions and subject to the same terms and conditions described in footnote 1
to that table.
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Verizon
2017 Proxy
Statement
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63
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Item 3: Advisory Vote to Approve Executive Compensation
Shareholders have strongly supported Verizons executive compensation program since our first annual advisory vote on the matter in 2009. We are
asking you to vote in favor of the following
non-binding
resolution:
Resolved, that the shareholders approve, on an
advisory basis, the compensation of the named executive officers, as disclosed in Verizons proxy statement for the 2017 Annual Meeting of Shareholders pursuant to the compensation disclosure rules of the Securities and Exchange Commission,
including the Compensation Discussion and Analysis, the Compensation Tables and the related narrative discussion.
The structure of our executive compensation
program for 2016 is substantially the same as it was last year. Our Board recommends a vote FOR this resolution because the Board believes our program effectively:
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Encourages strong short-term and long-term performance;
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Aligns the executives long-term interests with those of our shareholders; and
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Retains high-performing executives.
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In the Compensation Discussion and Analysis and Compensation Tables beginning on
page 28, we provide a detailed description of our executive compensation program, including our philosophy, the elements of our programs and the compensation of our named executive officers. We encourage you to read these sections before deciding
how to vote on this proposal.
This advisory resolution, commonly known as a
say-on-pay
resolution, is not binding on our Board of Directors. Nevertheless, the Board and the Human Resources Committee value shareholder feedback
received through this annual say-on-pay vote and our direct investor outreach program. The voting results and direct shareholder input are carefully reviewed and considered an important part of the process for evaluating our executive compensation
program.
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Our Board of Directors recommends that you vote for
this proposal.
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Verizon
2017 Proxy Statement
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Item 4: Advisory Vote on the Frequency of Future
Advisory Votes to Approve Executive Compensation
As required by SEC rules, we are asking shareholders to vote on whether future advisory votes on executive compensation should occur every year, every two years or
every three years.
In 2007, the Board adopted its current policy to include an advisory vote on executive compensation on the ballot at each annual meeting
beginning in 2009. Consistent with this policy the Board recommends that shareholders vote in favor of holding future
say-on-pay
votes every year.
You may cast your vote on the following resolution by choosing one year, two years or three years, or you may abstain from voting:
Resolved, that the shareholders of the Company determine, on an advisory basis, that the preferred frequency with which the shareholders of the Company shall have
an advisory vote on the compensation of the Companys named executive officers as set forth in the Companys proxy statement is:
Option 1 once
every year;
Option 2 once every two years;
Option 3 once every
three years; or
Option 4 abstain from voting.
This advisory
resolution is not binding on our Board of Directors. Nevertheless, the Board will review and consider the voting results when making a determination as to the frequency of future
say-on-pay
votes.
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Our Board of Directors recommends that you vote for
conducting future advisory votes on executive compensation every year.
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Verizon
2017 Proxy
Statement
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65
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Item 5: Approval of Verizons 2017
Long-Term Incentive
Plan
Introduction
We are asking shareholders to approve the 2017 Verizon Communications Inc. Long-Term Incentive Plan (the 2017 LTIP), which the Board of Directors adopted,
subject to shareholder approval, on February 2, 2017.
Verizon believes that long-term incentives and stock-based awards are important tools for attracting,
retaining and motivating employees and promote a performance-based culture by linking the interests of employees and shareholders. As described in more detail below, the 2017 LTIP includes several features designed to protect shareholder interests
and reflect our compensation philosophy:
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Double-trigger change in control provision.
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Awards subject to cancellation or clawback pursuant to Company policy.
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No evergreen provision (i.e., no automatic increase in the number of shares available for future issuances).
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No below-market grants of stock options or stock appreciation rights.
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No repricing of stock options or stock appreciation rights.
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Limit on
non-employee
director awards.
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Verizon currently maintains the 2009
Verizon Communications Inc. Long-Term Incentive (the 2009 LTIP). As of January 31, 2017, a total of 12,766,202 shares of common stock were subject to outstanding awards payable in shares granted under the 2009 LTIP, and an additional
93,118,079 shares of common stock were available for new award grants payable in shares under the 2009 LTIP. Verizons authority to grant new awards under the 2009 LTIP is scheduled to expire on May 9, 2019.
The Board approved the 2017 Plan, with a
ten-year
term ending on February 1, 2027, to give the Company greater flexibility to
continue to provide stock-based awards as incentives in the future.
If shareholders approve the 2017 LTIP, no new awards will be granted under the 2009 LTIP after
the 2017 Annual Meeting. In that case, the number of shares of Verizons common stock that remain available for award grants under the 2009 LTIP immediately prior to the 2017 Annual Meeting will become available for award grants under the 2017
LTIP. In addition, if shareholders approve the 2017 LTIP, any shares of common stock subject to outstanding awards under the 2009 LTIP that expire, are cancelled, or otherwise terminate after the 2017 Annual Meeting will also be available for
award grant purposes under the 2017 LTIP.
Verizon is not seeking to increase the number of shares authorized for issuance under the 2017 LTIP above the number of shares authorized and available for grant under the 2009 LTIP.
If shareholders do not approve the 2017 LTIP, Verizon will continue to have the authority to grant awards under the 2009 LTIP for the remaining term of the plan. If
shareholders approve the 2017 LTIP, the termination of our grant authority under the 2009 LTIP will not affect awards then outstanding under that plan.
Description of 2017 LTIP
The principal terms of the 2017 LTIP are
summarized below. The following summary is qualified in its entirety by the complete text of the 2017 LTIP, which is attached to this proxy statement as Appendix B.
Purpose
The 2017 LTIP is designed to:
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Promote a performance-based culture that links the interests of participants and shareholders;
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Motivate participants to continue to create shareholder value over the longer term; and
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Provide the Company with a variety of compensation tools that it can use to attract and retain the services of participants who make significant contributions to the Companys success.
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Verizon
2017 Proxy Statement
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Item 5: Approval of Verizons 2017
Long-Term Incentive
Plan
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Description of 2017
LTIP
Participation and administration
All employees of Verizon, as well as employees of any entity in which Verizon has an ownership interest of at least fifty percent (50%) or any entity which is
otherwise designated by the Committee (as defined below) as participating in the 2017 LTIP, are eligible to be granted awards under the 2017 LTIP. The
non-employee
members of the Board of Directors are also
eligible to be granted awards under the 2017 LTIP. As of December 31, 2016 approximately 160,900 employees of Verizon and certain related companies and all of Verizons
non-employee
Directors were
eligible to receive awards under the 2009 LTIP and would also have been considered eligible under the 2017 LTIP. In 2016, approximately 2,100 employees (including all of Verizons named executive officers) and 12
non-employee
Directors who served during 2016 were granted awards under the 2009 LTIP.
The administrator of the 2017 LTIP
is referred to as the Committee. Pursuant to the terms of the 2017 LTIP, the Committee is the Human Resources Committee of the Board or any other committee of directors (or the Board, if the Board so determines) appointed by the Board to
administer the Plan. The Committee may delegate certain administrative duties under the 2017 LTIP to Verizons Executive Vice President and Chief Administrative Officer (or other executive officers of Verizon specified by the Committee). The
Committee has broad authority under the plan with respect to award grants including, without limitation, the authority:
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to select participants and determine the types of awards that they are to receive;
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to determine the terms and conditions of awards, including the price (if any) to be paid for the shares or the award and, in the case of share-based awards, the number of shares to be offered or awarded;
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to determine any applicable vesting and exercise conditions for awards (including any applicable performance and/or time-based vesting or exercisability conditions) and the extent to which such conditions have been
satisfied, and to accelerate or extend the vesting or exercisability or extend the term of any or all outstanding awards;
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to determine the method of payment of any purchase price for an award or shares of Verizons common stock delivered under the 2017 LTIP, as well as any
tax-related
items with
respect to an award;
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to construe and interpret the plan and any award agreement or other agreement or instrument entered into or issued under the plan;
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to establish, amend or waive rules and regulations for the plans administration; and
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subject to the other provisions of the 2017 LTIP, to amend the terms and conditions of any outstanding award.
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All
determinations or decisions made by the Board or any Committee pursuant to the provisions of the 2017 LTIP are, by the terms of the plan, final, binding and conclusive on all persons.
Types of awards
As described in the
Compensation Discussion and Analysis beginning on page 28, consistent with past practice, Verizon granted in 2016 long-term incentive awards to employees in the form of performance stock units and restricted stock units. Under the 2017 LTIP, the
Committee has the authority to grant various types of awards including:
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Performance stock units and performance shares.
These awards are linked to the performance of the Company over a performance cycle designated by the Committee. The Committee will establish the terms and
conditions, any restrictions, other provisions that apply to each award, including any performance goals that may be used in determining the number and or value of performance stock units or performance shares to be paid out to the participant.
Awards may be payable in cash, Verizon common stock, or a combination of both, as determined by the Committee. The initial value of a performance stock unit cannot be less than the fair market value of a share of Verizon common stock on the date of
grant. The initial value of a performance share will be equal to the fair market value of a share of Verizon common stock on the date of grant.
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Restricted stock units and restricted stock.
These awards are grants of stock units or Verizon common stock that
may be forfeited or lapse if one or more of the terms of that award are not met. The Committee
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Verizon
2017 Proxy
Statement
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67
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Item 5: Approval of Verizons 2017
Long-Term Incentive
Plan
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Description of 2017 LTIP
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will determine the terms, conditions, restrictions and other provisions that apply to each award. The initial value of a restricted stock unit cannot be less than the fair market value of a share
of Verizon common stock on the date of grant. The initial value of a share of restricted stock will be equal to the fair market value of a share of Verizon common stock on the date of grant. Restricted stock units may be payable in cash, Verizon
common stock, or a combination of both, as determined by the Committee.
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Stock options.
Each stock option represents the right to purchase a specified number of shares of Verizon common stock at a fixed grant price. That grant price cannot be less than the fair market value of the
Verizon common stock on the date of grant. The maximum term of a stock option cannot exceed 10 years from the date of grant. Options will be exercisable only in accordance with terms established by the Committee. The purchase price of an option may
be payable in cash, Verizon common stock (valued at fair market value on the day of exercise), or a combination of both. The 2017 LTIP authorizes the Committee to grant nonqualified stock options or incentive stock options that comply with the
requirements of Section 422(b) of the Code.
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Other awards.
The Committee also has authority to grant a variety of other types of awards including, but not limited to, stock appreciation rights (SARs), share bonuses and other share equivalents
that are denominated in, payable in, valued in whole or in part by reference to, or otherwise related to shares of Verizon common stock.
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Qualified performance-based awards.
Performance shares, performance stock units, restricted stock units and restricted stock may be granted under the 2017 LTIP as Qualified Performance-Based Awards
that are intended to satisfy the performance-based exception under Section 162(m) of the Code. Stock options and stock appreciation rights may also qualify as performance-based awards within the meaning of Section 162(m). While the
Committee may grant awards that qualify (or are intended to qualify) as performance-based awards within the meaning of Section 162(m), nothing requires that any award qualify as performance-based within the meaning of Section 162(m) or
otherwise be deductible for tax purposes.
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The grant, vesting or payment of Qualified Performance-Based Awards may depend on the
performance of the Company on a consolidated basis, or on a subsidiary, segment, division, or business unit basis. The Committee will establish the criterion or criteria and target(s) on which performance will be measured. To qualify an award as
performance-based under Section 162(m), the Committee must consist solely of two or more outside directors (as this requirement is applied under Section 162(m)), the Committee must establish criteria and targets in advance of applicable deadlines
under Section 162(m) and while the attainment of the performance targets remains substantially uncertain, and the Committee must certify that any applicable performance goals and other material terms of the grant were satisfied. The performance
criteria to be used for this purpose shall be chosen from among:
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income measures (including, but not limited to, gross profit, operating income, earnings before or after taxes, or earnings per common share);
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return measures (including, but not limited to, return on assets, investment, equity, or sales);
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cash flow measures (including, but not limited to, free cash flow);
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economic value added; and
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share price (including, but not limited to, total shareholder return).
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These performance criteria may
be measured on an absolute or relative basis (including relative to the performance of other companies) and may also be expressed as a growth or decline measure relative to an amount or performance for a prior date or period. The performance
measurement period with respect to an award may range from three months to ten years. The terms of the Qualified Performance-Based Awards may specify the manner, if any, in which performance targets shall be adjusted to exclude the effects of
certain unusual or nonrecurring items identified in the 2017 LTIP documents or otherwise specified by the Committee at the time of establishing the goals.
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Verizon
2017 Proxy Statement
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Item 5: Approval of Verizons 2017
Long-Term Incentive
Plan
|
Description of 2017
LTIP
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Dividends and dividend equivalents.
The Committee may also provide that awards under the 2017 LTIP (other than options or stock appreciation rights) earn dividends or dividend equivalents based on the amount of
dividends paid on outstanding shares of Verizons common stock. Any dividend and dividend equivalent rights granted in connection with an award granted under the 2017 LTIP that is subject to vesting requirements will only vest and be paid to
the same extent that the related vesting conditions of the award are satisfied (or, in the case of a restricted stock or similar award where the dividend must be paid as a matter of law, the award will provide for the forfeiture or repayment of any
dividends on the shares subject to the award to the extent the award does not vest).
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No repricing
In no case (except due to an adjustment to reflect a stock split or other event referred to under Limitation on shares and awards below, or any repricing
that may be approved by shareholders) will the Committee (1) amend an outstanding stock option or stock appreciation right to reduce the exercise price or base price of the award, (2) cancel, exchange, or surrender an outstanding stock
option or stock appreciation right in exchange for cash or other awards (including, without limitation, any cash
buy-out
of an award) for the purpose of repricing the award, or (3) cancel, exchange, or
surrender an outstanding stock option or stock appreciation right in exchange for an option or stock appreciation right with an exercise or base price that is less than the exercise or base price of the original award.
Payment of awards
The Committee will determine
whether the awards have been earned and the date on which awards are payable. The Committee may permit or require a participant to defer all or a portion of an award subject to the requirements of Section 409A of the Code.
Limitation on shares and awards
The maximum
number of shares of Verizon common stock that may be issued pursuant to awards under the 2017 LTIP, as adjusted pursuant to the terms of the 2017 LTIP as described below, equals the sum of: (1) the number of shares of Verizon common stock
available for additional award grant purposes under the 2009 LTIP as of the date of the 2017 Annual Meeting and determined immediately prior to the termination of the authority to grant new awards under that plan as of that date; plus (2) the
number of any shares of Verizon common stock subject to any restricted stock awards, restricted stock unit awards, performance share awards, or other awards granted under the 2009 LTIP that are outstanding as of the date of the 2017 Annual Meeting
(or any applicable portion of such awards) that, after the date of the 2017 Annual Meeting, are paid in the form of cash (if originally awarded in shares and such shares were counted against the share limit of the 2009 LTIP as of the date of the
2017 Annual Meeting); plus (3) the number of shares of Verizon common stock subject to any restricted stock awards, restricted stock unit awards, performance share awards, or other awards granted under the 2009 LTIP that are outstanding as of
the date of the 2017 Annual Meeting (or any applicable portion of such awards) that, after the date of the 2017 Annual Meeting, are cancelled, terminate, expire or are forfeited for any reason. In no event will this maximum number of shares exceed
105,884,281, as adjusted pursuant to the terms of the 2017 LTIP as described below. As of January 31, 2017, approximately 93,118,079 shares were available for additional award grant purposes under the 2009 LTIP, approximately 12,766,202 shares were
subject to restricted stock unit awards payable in shares, and approximately 19,444,038 shares were subject to performance stock unit awards and restricted stock unit awards payable solely in cash. No other awards were outstanding under the 2009
LTIP as of that date. As noted above, no additional awards will be granted under the 2009 LTIP if shareholders approve the 2017 LTIP.
Of the total maximum number
of shares that may be issued pursuant to awards under the 2017 LTIP as described above, not more than 20,000,000 of such shares will be available for issuance pursuant to the exercise of stock options that qualify as incentive stock options under
Section 422 of the Code. The maximum aggregate number of shares of Verizon common stock with respect to which all awards may be granted under the 2017 LTIP in a single calendar year to an individual participant may not exceed 3,000,000 shares.
The
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Verizon
2017 Proxy
Statement
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69
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Item 5: Approval of Verizons 2017
Long-Term Incentive
Plan
|
Description of 2017 LTIP
maximum aggregate number of shares of Verizon common stock with respect to which stock options and stock appreciation rights may be granted under the 2017 LTIP in a single calendar year to an
individual participant may not exceed 3,000,000 shares.
As is customary in incentive plans of this nature, if certain events occur, the Committee is required to
adjust the number, type and/or price of shares subject to outstanding awards. These events include a stock split, a corporate transaction, including a merger, consolidation, separation,
spin-off,
or other
distribution of stock or property of the Company, a reorganization, a partial or complete liquidation of the Company, or other similar events. The adjustments are designed to prevent dilution or enhancement of the benefits available under the 2017
LTIP should any of these events occur. Corresponding adjustments would also be made to the shares then remaining available for award grant purposes under the 2017 LTIP and the individual share limits described above.
Shares will be considered to be issued under the 2017 LTIP at the time awards denominated in shares or units that are payable in shares are granted to a participant.
However, the number of shares available under the 2017 LTIP will be restored to the extent that (i) stock-based awards are paid in cash, or (ii) shares subject to an award are cancelled, terminated or forfeited or shares are subject to a
grant that expires. However, shares used to pay an option exercise price or tax withholding obligation with respect to an award will not be available for future award grants under the 2017 LTIP (regardless of whether the shares so used were
previously acquired shares or shares withheld that otherwise would have been acquired on the exercise or payment of an award). In addition, the total number of shares subject to the portion of a stock-settled SAR that is exercised will not be
available for future award purposes under the 2017 LTIP regardless of whether a lesser number of shares is actually delivered upon exercise of the SAR. Awards granted under the 2017 LTIP that are payable solely in cash in accordance with the terms
of the award do not reduce the number of shares available for issuance under the 2017 LTIP.
In addition, the 2017 LTIP generally provides that shares issued in
connection with awards that are granted by, or become obligations of, Verizon through the assumption of awards (or in substitution for awards) in connection with an acquisition of another company will not count against the shares available for
issuance under the 2017 LTIP. Verizon may not increase the applicable share limits of the 2017 LTIP by repurchasing shares of common stock on the market (by using cash received through the exercise of stock options or otherwise).
The maximum grant date fair value for awards granted to a
non-employee
Director under the 2017 LTIP during any one calendar year
is $600,000. For purposes of this limit, the grant date fair value of an award means the value of the award on the date of grant of the award determined using the equity award valuation principles applied in Verizons financial
reporting. This limit does not apply to, and will be determined without taking into account, any award granted to an individual who, on the grant date of the award, is an officer or employee of Verizon or one of its subsidiaries. This limit applies
on an individual basis and not on an aggregate basis to all
non-employee
Directors as a group.
Amendment and termination of the 2017 LTIP
Unless the 2017 LTIP is terminated earlier, and subject to any extension that may be approved by shareholders, the authority to grant new awards under the 2017 LTIP
will terminate on February 1, 2027. Outstanding awards, as well as the Committees authority with respect thereto, generally will continue following the expiration or termination of the plan. Prior to the expiration date, the Committee may
amend, suspend or terminate the 2017 LTIP in whole or in part. The Committee may not amend the 2017 LTIP without shareholder approval to the extent shareholder approval would be required under any requirement of applicable law or regulation.
Double-trigger change in control provision
Consistent with the 2009 LTIP, the 2017 LTIP provides for a double trigger for the vesting of any outstanding awards following a change in
control (as defined in the 2017 LTIP). In the event that (i) a change in control occurs and (ii) within 12 months following the occurrence of the change in control, the participant is either
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Verizon
2017 Proxy Statement
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Item 5: Approval of Verizons 2017
Long-Term Incentive
Plan
|
Description of 2017
LTIP
involuntarily terminated by Verizon without cause or the participant leaves his or her position for good reason (as these terms are defined in the applicable award
agreement, to the extent applicable to the award), the 2017 LTIP provides that any then outstanding stock options and SARs will become exercisable and all other awards will vest and be paid at their targeted award level. However, upon the occurrence
of such an event, restricted stock units and performance stock units generally will not be paid until their regularly scheduled time under the terms of the applicable award agreement. While no award granted under the 2017 LTIP may vest or become
immediately payable or exercisable merely upon the occurrence of a change in control, the Committee has the discretion to establish other change in control provisions with respect to awards granted under the 2017 LTIP.
Transfer restrictions
Subject to the
provisions of the 2017 LTIP, awards under the plan generally are not transferable by the recipient other than by will or the laws of descent and distribution and are generally exercisable, during the recipients lifetime, only by the recipient.
Separation from service
The Committee has
discretion to determine, with respect to each award granted under the 2017 LTIP, the extent (if any) to which the recipient of the award will have rights with respect to the award following the recipients separation from service with Verizon
and/or any of its related companies.
No limit on other
authority
Except
as expressly provided with respect to the termination of the authority to grant new awards under the 2009 LTIP if shareholders approve the 2017 LTIP, the 2017 LTIP does not limit the authority of Verizon, the Board of Directors or any committee to
grant awards or authorize any other compensation, with or without reference to the Verizons common stock, under any other plan or authority.
Federal income tax considerations
The U.S. federal income tax consequences of the 2017 LTIP under the Code, which is subject to
change, are summarized in the following discussion of the general tax principles applicable to the 2017 LTIP. This summary is not intended to be exhaustive and, among other considerations, does not describe the deferred compensation provisions of
Section 409A of the Code to the extent an award is subject to and does not satisfy those rules, nor does it describe any state, local, or international tax consequences. The federal income tax consequences of any particular award may vary based
on the terms and conditions associated with that award.
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Restricted stock units, performance stock units and performance shares.
A participant who has been granted a restricted stock unit, performance stock unit or performance share will not realize taxable income at
the time of grant, and the Company will not be entitled to claim a corresponding income tax deduction at that time. The participant will have income equal to the amount of cash received when the award is paid and/or the fair market value of the
shares received at the time such shares are distributed. Verizon will be entitled to claim a corresponding income tax deduction at that time (subject to any limitation under Section 162(m) of the Code discussed below).
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Restricted stock.
A participant who has been granted shares of restricted stock will not realize taxable income at the time of grant, and the Company will not be entitled to claim a corresponding income tax
deduction, assuming that any restrictions on the participants ability to earn such award create a substantial risk of forfeiture for federal income tax purposes. When the stock that is the subject of an award vests, the participant
will realize ordinary income in an amount equal to the then fair market value of those shares, and the Company will be entitled to claim a corresponding income tax deduction. Alternatively, a participant may elect under Section 83(b) of the
Code to recognize income at the date of grant of restricted stock and to have the applicable capital gain holding period commence as of that date. In that event, Verizon will be entitled to claim a corresponding income tax deduction as of the date
of grant.
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Verizon
2017 Proxy
Statement
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71
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Item 5: Approval of Verizons 2017
Long-Term Incentive
Plan
|
Description of 2017 LTIP
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Stock options and SARs.
A participant will not recognize any taxable income, and Verizon will not be entitled to claim a corresponding income tax deduction, upon the grant of a nonqualified stock option,
incentive stock option or SAR under the 2017 LTIP.
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If a participant exercises a nonqualified stock option or SAR, he or she will
recognize taxable income equal to the difference between the fair market value of Verizon common stock on the date of exercise and the grant price of such nonqualified stock option or SAR. Verizon will be entitled to claim an income tax deduction
equal to the amount of taxable income recognized by the participant.
A participant does not recognize taxable income upon the exercise of an
incentive stock option. However, the difference between the fair market value of Verizon common stock on the date of exercise and the grant price of the incentive stock option is a tax preference item that must be considered in determining whether
the participant is subject to the alternative minimum tax. Gain or loss from the sale of the Verizon common stock received from the exercise of an incentive stock option is capital gain or loss if the participant does not dispose of the stock
acquired through the exercise of the incentive stock option within two years after the date of grant, and such stock is held for at least one year after the option is exercised. If the above holding period requirements are not met, part or all of
any income recognized on the date of sale of the Verizon common stock will be subject to tax as ordinary income, and Verizon will be entitled to claim an income tax deduction in an equal amount. An incentive stock option becomes a nonqualified stock
option if it is exercised more than three months after the participant has terminated his or her employment with Verizon or 12 months if the termination of employment is due to death or disability.
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Section
162(m) deduction limits.
Section 162(m) of the Code generally provides that a federal income tax deduction is typically not available to Verizon for annual compensation in excess
of $1,000,000 paid to each of Verizons chief executive officer and the three other highest compensated executive officers (other than the chief financial officer), as determined pursuant to the executive compensation proxy statement disclosure
rules in a particular year. However, certain performance-based compensation that satisfies the requirements of the performance-based exception under Section 162(m) of the Code is not subject to this limit. The Committee may
designate certain awards under the 2017 LTIP as intended to qualify as performance-based compensation for purposes of Section 162(m) of the Code.
|
Specific benefits under the 2017 LTIP
Verizon
has not approved any awards that are conditioned upon shareholder approval of the 2017 LTIP. Verizon is not currently considering any other specific award grants under the 2017 LTIP. If the 2017 LTIP had been in existence in fiscal 2016, we expect
that Verizons award grants made in fiscal 2016 would not have been substantially different from those actually made in that year under the 2009 LTIP. For information regarding stock-based awards granted to Verizons named executive
officers during 2016, see the Long-term incentive compensation section of the Compensation Discussion and Analysis beginning on page 40.
The following paragraphs
include additional information to help you assess the potential dilutive impact of Verizon equity awards and the 2017 LTIP.
Overhang refers to the
number of shares of Verizons common stock that are subject to outstanding awards or remain available for new award grants. The following table shows the total number of shares of Verizons common stock that were subject to outstanding
restricted stock unit awards payable in shares granted under the 2009 LTIP and that were then available for new award grants under the 2009 LTIP as of December 31, 2016 and as of January 31, 2017. (In this 2017 LTIP proposal, the number of
shares of Verizons common stock subject to restricted stock unit awards outstanding on any particular date is presented including the crediting of dividend equivalents on the awards through that date, to the extent the dividend equivalents are
payable in shares of common stock.) We have not granted new stock options since 2004, and as of both December 31, 2016 and January 31, 2017 we did not have any stock options outstanding under any equity compensation plan. All of our
performance stock unit awards and restricted stock unit awards outstanding on these dates that were payable solely in cash are not included in the table below.
|
|
|
72
|
|
|
Verizon
2017 Proxy Statement
|
Item 5: Approval of Verizons 2017
Long-Term Incentive
Plan
|
Description of 2017
LTIP
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2016
|
|
|
As of January 31, 2017
|
|
Shares subject to outstanding restricted
stock unit awards
|
|
|
12,773,562
|
|
|
|
12,766,202
|
|
Shares available for new award grants
|
|
|
93,110,719
|
|
|
|
93,118,079
|
|
In addition, as of both December 31, 2016 and January 31, 2017, a total of 188,931 shares and 185,790 shares, respectively, of
Verizons common stock were subject to outstanding vested but deferred stock units credited to the Verizon Income Deferral Plan, which were originally granted under legacy Bell Atlantic and NYNEX stock option plans (Legacy Option
Plans) or the Verizon Communications Broad-Based Incentive Plan (the Broad-Based Incentive Plan). No new awards may be granted under the Legacy Option Plans or the Broad-Based Incentive Plan.
Burn rate refers to the number of shares that are subject to awards that we grant over a particular period of time. The following table shows, for each of
the last three fiscal years, and to date (as of January 31, 2017) for 2017: (1) the total number of shares of Verizons common stock subject to awards that Verizon granted under the 2009 LTIP in that period (all of which were in the form
of restricted stock unit awards), (2) the weighted-average number of shares of Verizons common stock issued and outstanding in that period; (3) the burn rate for that period (which, as presented in the table below, is
determined by dividing the total number of shares of Verizons common stock subject to awards that Verizon granted under the 2009 LTIP in that period by the weighted-average number of shares of Verizons common stock issued and outstanding
in that period); (4) the total number of shares of our common stock that were subject to awards granted under the 2009 LTIP that terminated or expired, and thus became available for new award grants under the 2009 LTIP, in that period (which shares
have been taken into account when information is presented in this 2017 LTIP proposal on the number of shares available for new award grants under the 2009 LTIP), and (5) the number of shares credited as dividend equivalents under the 2009 LTIP
in that period with respect to then-outstanding restricted stock unit awards and performance stock unit awards payable in shares, to the extent the dividend equivalents are payable in shares of Verizons common stock.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal
2014
|
|
|
Fiscal
2015
|
|
|
Fiscal
2016
|
|
|
Fiscal 2017
(to date as of
January 31
2017)
|
|
(1) Total number of shares of Verizons common stock
subject to awards granted under the 2009 LTIP*
|
|
|
5,110
|
|
|
|
4,799
|
|
|
|
4,099
|
|
|
|
8
|
|
(2) Weighted-average number of shares of Verizons
common stock issued and outstanding*
|
|
|
3,973,834
|
|
|
|
4,085,339
|
|
|
|
4,079,982
|
|
|
|
4,081,145
|
|
(3) Burn rate (the percentage obtained by dividing (1) by (2))
|
|
|
0.13%
|
|
|
|
0.12%
|
|
|
|
0.10%
|
|
|
|
0.00%
|
|
(4) Total number of shares of Verizons common stock
subject to 2009 LTIP awards that terminated or expired*
|
|
|
256
|
|
|
|
142
|
|
|
|
94
|
|
|
|
16
|
|
(5) Total number of shares of Verizons common stock
credited as dividend equivalents under the 2009 LTIP*
|
|
|
656
|
|
|
|
636
|
|
|
|
582
|
|
|
|
0
|
|
Our performance stock unit awards and certain restricted stock unit awards granted during these
periods are payable solely in cash and are not reflected in the table above.
The Compensation Committee anticipates that the shares that will be available for
award grants under the 2017 LTIP (assuming usual levels of shares becoming available for new awards as a result of forfeitures of outstanding awards), if it is approved by shareholders, will provide Verizon with flexibility to continue to grant
equity awards through approximately
the end of 2027
(reserving sufficient shares to cover dividend equivalents
|
|
|
Verizon
2017 Proxy
Statement
|
|
|
73
|
Item 5: Approval of Verizons 2017
Long-Term Incentive
Plan
|
Description of 2017 LTIP
that may be credited with respect to awards based on Verizons recent dividend payments). However, this is only an estimate, in Verizons judgment, based on current circumstances. The
total number of shares that are subject to Verizons award grants in any one year or from
year-to-year
may change based on a number of variables, including, without
limitation, the value of Verizons common stock (since higher stock prices generally require that fewer shares be issued to produce awards of the same grant date fair value), changes in competitors compensation practices or changes in
compensation practices in the market generally, changes in the number of employees granted awards, changes in the number of directors and officers, whether and the extent to which vesting conditions applicable to equity-based awards are satisfied,
acquisition activity and the need to grant awards to new employees in connection with acquisitions, the need to attract, retain and incentivize key talent, the number of dividend equivalent rights outstanding and the amount and frequency of
Verizons dividend payments, the extent to which awards or dividend equivalents are settled in cash, the type(s) of awards Verizon grants and how Verizon chooses to balance total compensation between cash
and equity-based
awards.
The closing market price for a share of Verizons common stock as of January 31,
2017 was $49.01 per share.
Equity compensation plan information
The following table provides information as of December 31, 2016 for (i) all equity compensation plans previously approved by Verizons shareholders, and
(ii) all equity compensation plans not previously approved by Verizons shareholders. Since the adoption of the 2009 LTIP, Verizon has only issued awards under the 2009 LTIP, which provides for awards of stock options, restricted stock,
restricted stock units, performance stock units and other equity-based hypothetical stock units to employees of Verizon and its subsidiaries. No new awards are permitted to be issued under any other equity compensation plan. In accordance with U.S.
Securities and Exchange Commission rules, the table does not include outstanding awards that are payable solely in cash by the terms of the award, and such awards do not reduce the number of shares remaining for issuance under the 2009 LTIP.
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan category
|
|
Number of securities to
be
issued upon
exercise of outstanding
options, warrants and rights
|
|
|
Weighted-average
exercise price
of
outstanding options,
warrants and rights
|
|
|
Number of securities remaining available
for future issuance under equity
compensation plans (excluding securities
reflected in column (a))
|
|
Equity compensation plans
approved by
security holders
|
|
|
12,782,994
1
|
|
|
$
|
48.85
2
|
|
|
|
93,110,719
3
|
|
Equity compensation plans
not approved
by security holders
|
|
|
179,499
4
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
$
|
|
|
|
|
|
|
1
|
This amount includes: 12,773,562 shares of common stock subject to outstanding restricted stock units including dividend equivalents accrued on such awards through December 31, 2016 to the extent such dividend
equivalents are payable in shares of Verizon common stock) and 9,432 shares subject to deferred stock units credited to the Verizon Income Deferral Plan, which were originally granted under the Legacy Option Plans. This does not include performance
stock units, dividend equivalents, or other awards payable solely in cash. No stock options granted by Verizon were outstanding under any equity compensation plan and no new awards may be granted under the Legacy Option Plans.
|
2
|
No stock options were outstanding under any Verizon equity compensation plan. Verizons outstanding restricted stock units do not have exercise prices associated with the settlement of these awards.
|
3
|
This number reflects the number of shares of common stock that remained available for future issuance under the 2009 LTIP.
|
4
|
This number reflects shares subject to deferred stock units credited to the Verizon Income Deferral Plan, which were originally granted in 2002 under the Broad-Based Incentive Plan. No new awards may be granted under
the Broad-Based Incentive Plan.
|
|
|
|
|
|
Our Board of Directors recommends that you vote for this
proposal.
|
|
|
|
74
|
|
|
Verizon
2017 Proxy Statement
|
Stock Ownership
Section 16(a) Beneficial Ownership Reporting Compliance
SEC rules require us to disclose any late filings of stock transaction reports by our executive officers and Directors. Based solely on a review of the reports that we
filed on behalf of these individuals or that were otherwise provided to us, our executive officers and Directors met all Section 16(a) filing requirements during calendar year 2016.
Security Ownership of Certain Beneficial Owners and Management
Principal shareholders
On March 6, 2017, there were approximately 4.08
billion shares of Verizon common stock outstanding. Each of these shares is entitled to one vote. The following table sets forth information about persons we know to beneficially own more than five percent of the shares of Verizon common stock,
based on our records and information reported in filings with the SEC. To the extent that information in the table is based on information contained in an SEC filing, it is accurate only as of the date referenced in the filing.
|
|
|
|
|
|
|
|
|
Name and address of
beneficial owner
|
|
Amount and nature of
beneficial ownership
|
|
|
Percent of class
|
|
BlackRock Inc.
1
|
|
|
|
|
|
|
|
|
40 East 52
nd
Street
|
|
|
|
|
|
|
|
|
New York, New York 10022
|
|
|
251,466,311
|
|
|
|
6.2%
|
|
The Vanguard Group
2
|
|
|
|
|
|
|
|
|
100 Vanguard Blvd.
|
|
|
|
|
|
|
|
|
Malvern, Pennsylvania 19355
|
|
|
268,939,405
|
|
|
|
6.6%
|
|
1
|
This information is based on a Schedule 13G filed with the SEC on January 26, 2017 by BlackRock Inc., setting forth information as of December 31, 2016. The Schedule 13G states that BlackRock Inc. has sole voting
power with respect to 215,738,888 shares, shared voting power with respect to 12,531 shares, sole dispositive power with respect to 251,453,780 shares, and shared dispositive power with respect to 12,531 shares.
|
2
|
This information is based on a Schedule 13G filed with the SEC on February 10, 2017 by The Vanguard Group, setting forth information as of December 31, 2016. The Schedule 13G states that The Vanguard Group has sole
voting power with respect to 6,409,378 shares, shared voting power with respect to 783,995 shares, sole dispositive power with respect to 261,803,993 shares, and shared dispositive power with respect to 7,135,412 shares.
|
|
|
|
Verizon
2017 Proxy
Statement
|
|
|
75
|
Stock Ownership
|
Directors and executive officers
Directors and executive officers
The following table shows the number of shares of Verizon common stock beneficially owned by each of the named executive officers, each Director, and all executive
officers and Directors as a group as of January 31, 2017. This information includes shares held in Verizons employee savings plans and shares that may be acquired within 60 days upon the conversion of certain stock units under deferred
compensation plans and/or stock-based long-term incentive awards. The aggregate number of shares owned by executive officers and Directors represents less than one percent of the total number of outstanding shares of Verizon common stock. Unless we
indicate otherwise, each individual has sole voting and/or investment power with respect to the shares. Executive officers and Directors also have interests in other stock-based units under Verizon deferred compensation plans and stock-based
long-term incentive awards. We have included these interests in the Total stock-based holdings column in the table below to show the total economic interest that the executive officers and Directors have in Verizon common stock.
|
|
|
|
|
|
|
|
|
Name
|
|
Stock
1,2
|
|
|
Total stock-based
holdings
3
|
|
Named Executive Officers
|
|
|
|
|
|
|
|
|
Lowell McAdam*
|
|
|
760,071
|
|
|
|
1,534,465
|
|
Matthew Ellis
|
|
|
27,602
|
|
|
|
107,201
|
|
John Stratton
|
|
|
114,503
|
|
|
|
405,315
|
|
Marni Walden
|
|
|
92,693
|
|
|
|
386,290
|
|
Marc Reed
|
|
|
106,907
|
|
|
|
338,292
|
|
Francis Shammo**
|
|
|
42,544
|
|
|
|
308,000
|
|
Directors
|
|
|
|
|
|
|
|
|
Shellye Archambeau
|
|
|
|
|
|
|
13,675
|
|
Mark Bertolini
|
|
|
|
|
|
|
9,321
|
|
Richard Carrión
|
|
|
4,962
|
|
|
|
114,637
|
|
Melanie Healey
|
|
|
|
|
|
|
22,544
|
|
M.
Frances Keeth
|
|
|
|
|
|
|
53,878
|
|
Karl-Ludwig Kley
|
|
|
|
|
|
|
6,695
|
|
Donald Nicolaisen***
|
|
|
|
|
|
|
|
|
Clarence Otis, Jr.
|
|
|
3,000
|
|
|
|
64,422
|
|
Rodney Slater
|
|
|
|
|
|
|
32,981
|
|
Kathryn Tesija
|
|
|
|
|
|
|
17,555
|
|
Gregory Wasson
|
|
|
|
|
|
|
16,646
|
|
Gregory Weaver
|
|
|
|
|
|
|
7,324
|
|
All of the above and other executive officers as a group
4
|
|
|
1,275,090
|
|
|
|
3,914,664
|
|
*
|
Mr. McAdam also serves as a Director.
|
**
|
Mr. Shammo retired from the Company on December 31, 2016.
|
***
|
Mr. Nicolaisen resigned from the Board on December 31, 2016.
|
|
|
|
76
|
|
|
Verizon
2017 Proxy Statement
|
Stock
Ownership
|
Directors and executive officers
1
|
In addition to direct and indirect holdings, the Stock column includes shares that may be acquired within 60 days pursuant to the conversion of RSUs granted in 2014 as follows: 115,140 shares for
Mr. McAdam; 20,486 shares for Mr. Ellis; 40,299 shares for Mr. Stratton; 33,583 shares for Ms. Walden; 33,583 shares for Mr. Reed; and 41,559 shares for Mr. Shammo. The Stock column also includes shares that
may be acquired within 60 days pursuant to the conversion of certain stock units under deferred compensation plans, including 3,651 shares for Mr. Carrión. Prior to conversion, the shares underlying the RSUs and deferred compensation
units may not be voted or transferred. No shares are pledged as security.
|
2
|
Mr. Shammos holdings include 923 shares held by his spouse with whom he shares voting and/or investment power. Ms. Waldens holdings include 14,210 shares held by a trust with which she shares
voting and/or investment power. Mr. Reeds holdings include 2,931 shares held by a trust with which he shares voting and/or investment power.
|
3
|
The Total stock-based holdings column includes, in addition to shares listed in the Stock column, stock-based units under deferred compensation plans and stock-based long-term incentive awards,
which may not be voted or transferred.
|
4
|
Does not include shares held by Mr. Shammo, who retired from the Company on December 31, 2016, or Mr. Nicolaisen, who resigned from the Board on December 31, 2016.
|
|
|
|
Verizon
2017 Proxy
Statement
|
|
|
77
|
Items 6 11: Shareholder Proposals
We have been advised that the shareholders submitting the proposals or their representatives intend to present the following proposals at the Annual Meeting. The
statements contained in the proposals and supporting statements are the sole responsibility of the respective proponents. The proposals may contain assertions about Verizon or other matters that Verizon believes are incorrect, but we do not attempt
to refute all of those assertions. The addresses of the proponents, as well as the names and addresses of any
co-sponsors,
are available upon written request to the Assistant Corporate Secretary at the address
specified under Contacting Verizon.
Item 6: Human Rights Committee
Mr. Jing Zhao, owner of 50 shares of Verizons common stock, proposes the following:
Shareholder Proposal on Human Rights Committee
Resolved: Shareholders recommend that Verizon Communications Inc. (Verizon) establish a Human Rights Committee to review, assess, disclose, and make recommendations to
enhance Verizons corporate policy and practice on human rights. The board of directors is recommended, in its discretion and consistent with applicable laws to: (1) designate the members of the committee, (2) provide the
committee with sufficient funds for operating expenses, (3) adopt a charter to specify the powers of the committee, (4) empower the committee to solicit public input and to issue periodic reports to shareholders and the public on the
committees activities, findings and recommendations, and (5) adopt any other measures.
Supporting Statement
Verizon has to seriously deal with international human rights issues since Yahoo has become part of Verizon. Yahoo failed because of its disastrous unethical human
rights practice.
US-Japan-China
Comparative Policy Research Institutes Corporate Social Responsibility Review http://cpri.tripod.com/cpr2016/csrr5.pdf rated Yahoo the lowest F with detailed
documents since 2007, including some recently published coverage regarding the Yahoo Human Rights Fund (YHRF) and Yahoos agent Harry Wu:
1)
The Statement by Seven Former Chinese Political Prisoners Regarding the Death of Harry Wu and the Abuses of the Yahoo Human Rights Fund
https://chinachange.org/2016/04/28/statement-by-seven-former-chinese-political-prisoners-regarding-the-death-of-harry-wu-and-the-abuses-of-the-yahoo-human-rights-fund/
(April 28, 2016): of the approximately
$14-15 million
of the YHRF that has been spent from 2008 to 2015,
only about $700,000 was used to provide humanitarian aid to Chinese dissidents.
2) The Complicated and Contradictory Legacy of Harry Wu
https://foreignpolicy.com/2016/05/25/the-compIicated-and-contradictory-life-of-harry-wu-china-yahoo/
(Foreign Policy Report May 25, 2016): he was ready to break rules or even laws.
3) Gadflies at the Gate: Why Do Individual Investors Sponsor Shareholder Resolutions?
http://www.gsb.stanford.edu/faculty-research/publications/gadflies-gate-why-do-individual-investors-sponsor-shareholder
(Stanford Business School, August 2016) introduced my proposal at the 2011 Yahoo
shareholders meeting: Finally, one investor succeeded in compelling Yahoo to include his proposal on human rights violations following five years of rejection. My proposal mentioned: Yahoo Human Rights Fund has been politically
abused.
4) Champion of Human Rights in China Leaves a Tarnished Legacy
http://www.nytimes.com/2016/08/14/us/champion-of-human-rights-in-china-leaves-a-tarnished-legacy.html
(New York Times August 13, 2016): He......spending more than $13 million of the Yahoo money to operate his own foundation. In some years, financial disclosure forms show that the foundation spent less than
2 percent of annual disbursements on direct assistance to Chinese dissidents or their families; in recent years, such grants all but dried up.
|
|
|
78
|
|
|
Verizon
2017 Proxy Statement
|
Items 6 11: Shareholder Proposals
|
Item 6: Human Rights Committee
To prevent Verizon from becoming Yahoo, please vote for this proposal.
|
|
|
|
|
|
|
|
|
|
|
Our Board of Directors recommends that you vote
against this proposal for the following reasons:
|
While Verizon shares the proponents concern for human rights, the Board believes that adoption of this proposal
is unnecessary to maintain Verizons continued commitment to universal human rights.
Support for universal human rights has
long been and will continue to be a core value and a significant part of the way in which Verizon conducts business. Verizons commitments are expressed in our Credo, our Code of Conduct, our Human Rights Policy and our Supplier Code of
Conduct. Verizon strives to create an environment of respect, integrity and fairness for our employees and customers wherever we do business, and we expect our business partners to operate the same way. Verizons Human Rights Policy is
consistent with the spirit and intent of widely recognized international human rights principles, including the United Nations Universal Declaration of Human Rights. Verizons Supplier Code of Conduct mandates that our partners and
suppliers, both locally and globally, conduct their operations not only in compliance with applicable laws but in an ethically responsible manner.
The Board does not believe that a separate committee focused on human rights is necessary to further enhance the Companys
commitment to human rights. Verizons existing governance framework already includes a designated committee of its Board of Directors the Corporate Governance and Public Policy Committee that has responsibility for overseeing
Verizons policies relating to corporate social responsibility, including human rights, as well as a broad array of public policy issues. In light of this, the Board believes that the formation of a new human rights committee would
duplicate the work of this committee.
Finally, the proponents belief that Verizon must establish a separate human
rights committee because Yahoo has become part of Verizon and Yahoo failed because of its disastrous unethical human rights practice is based on an incorrect premise. Yahoo has not become part of Verizon. On
July 25, 2016, Verizon announced that the Company had entered into a definitive agreement under which Verizon will acquire Yahoos operating business. That transaction has not yet closed. Accordingly, Verizon has extremely limited
visibility into Yahoos human rights practices and at the present time has no reason to believe Verizons current corporate governance structure will not be sufficient to address the impact of any human rights issues relating to Yahoo on
Verizons business worldwide.
For all of these reasons, the Board believes that establishing an
additional Board committee is unnecessary and would not be in the best interest of shareholders. Accordingly, the Board recommends that you vote against this proposal.
Item 7: Report on Greenhouse Gas Reduction Targets
The Portfolio 21 Global Equity Fund, owner of 60,000 shares of Verizons common stock, and three co-sponsors propose the following:
Resolved:
Shareholders request Verizon Communications senior management,
with oversight from the Board of Directors, issue a report assessing the feasibility of adopting science-based greenhouse gas (GHG) reduction targets consistent with the
2-degree
scenario.
|
|
|
Verizon
2017 Proxy
Statement
|
|
|
79
|
Items 6 11: Shareholder
Proposals
|
Item 7: Report on Greenhouse Gas Reduction Targets
Whereas:
In December
2015, representatives from 195 countries adopted the Paris Climate Agreement, which specifies a goal to limit the increase in global average temperature to well below 2°C above
pre-industrial
levels and
pursue efforts to limit temperature increases to 1.5°C. In order to meet this goal, climate scientists estimate it is necessary to reduce global emissions by 55 percent by 2050 (relative to 2010 levels), entailing a US reduction target of
80 percent.
The costs of failing to address climate change are significant and according to a 2015 report by Citigroup, could lead to a $72 trillion loss to
global GDP.
Risky Business,
a recent analysis of climate change impact, finds serious economic effects including property damage, shifting agricultural patterns, reduced labor productivity, and increased energy costs. These effects could
substantially impact a companys business operations, revenue, or expenditure.
In 2013, CDP found that four out of five companies earn a higher return on
carbon reduction investments than on their overall corporate capital investments, and that energy efficiency improvements earned an average return on investment of 196%, with an average payback period between two and three years. Money saved from
energy efficiency and clean energy investments can be reinvested into the business, benefiting shareholders.
Renewable energy will need increasingly to replace
fossil fuels in the supply of electricity, with the management of this variable energy source dependent on adequate storage capacity. The rapid growth of the digital economy has given the telecommunications sector the opportunity to drive
significant change in the demand and consumption of clean energy. With the continued growth of data usage and the corresponding demand for more energy, there is a stronger emphasis on the need for companies to diversify their energy sources. The
average price of wind energy installed in 2014 was 2.5 cents per kWh according to Lawrence Berkeley National Laboratory. Electricity costs from sources such as wind and solar have declined rapidly and are now cheaper in some regions than fossil
fuel-based energy.
A growing number of companies are aligning their emissions reduction targets with climate science. BT Group, a leading telecommunications
company and Verizon peer, is one the 196 companies who have made this commitment. BT Group has also committed to sourcing 100% of electricity from renewable sources by 2020. By setting ambitious climate goals BT group has achieved an 80% reduction
in absolute carbon emissions 3 years early and realized £2.147 million in savings.
Verizon Communications does not currently have carbon reduction or
clean energy goals that are based on climate science. By setting science-based commitments, the company can strengthen its climate change strategy, reduce costs, manage operational and reputational risk, and create new products and services.
|
|
|
80
|
|
|
Verizon
2017 Proxy Statement
|
Items 6 11: Shareholder Proposals
|
Item 7: Report on Greenhouse Gas Reduction Targets
|
|
|
|
|
|
|
|
|
|
|
Our Board of Directors recommends that you vote
against this proposal for the following reasons:
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Verizon believes that a connected world is a more sustainable world. Our networks create powerful opportunities for
individuals, businesses and governments to reduce their energy use by managing resources more efficiently. At every level of Verizon from the way we operate our business to how we develop our products and services to how we pay our
employees we work to minimize our environmental impact. Electricity usage is the biggest contributor to Verizons carbon footprint. Thats why were focused on network and data center energy efficiency, earning LEED
and ENERGY STAR certification for our retail stores and engaging our employees through our Green Team initiative to identify additional ways to reduce our environmental footprint. In fact, Verizon is one of the few companies in our peer
group
that
includes a sustainability target relating to improving the carbon intensity of our operations as one of the performance measures for management employees short-term incentive compensation awards. For 2017, the target
relates to implementing further reductions in the carbon intensity of Verizons operations through network upgrades.
In 2009,
Verizon pledged to reduce our carbon intensity the amount of carbon our business emits divided by the number of terabytes of data we transport over our networks by 50 percent over the 2009 baseline by 2020, even as we grew our
business. In 2016 we achieved our goal four years ahead of schedule. We accomplished this by installing economizers to make cooling systems more efficient, migrating from copper to optical fiber, making building improvements and changes in our
fleet operations and investing in renewable sources of energy. We now generate over 24 megawatts of green energy in the United States every year. And we have a new goal of doubling our current green energy capacity by implementing an additional
24 MW of green energy by 2025.
While the Board is committed to continue building on the progress we have made
in making our operations more environmentally sustainable, the Board does not believe that the prescriptive approach outlined in the proposal is the best way to develop our sustainability goals. Given the rapid pace of innovation and change in the
telecommunications industry, the Board believes that Verizon should continue to maintain the flexibility to develop actionable sustainability goals that are right for the Companys business strategy and planning horizon. Accordingly, the Board
believes that the proposal is not in the best interests of Verizon or our shareholders.
Item 8: Special Shareowner
Meetings
Kenneth Steiner, owner of no less than 500 shares of Verizons common stock, proposes the following:
Proposal 8Special Shareowner Meetings
Resolved,
Shareowners ask our board to take the steps necessary (unilaterally if possible) to amend our bylaws and each appropriate governing document to give holders in the aggregate of 15% of our outstanding common stock the power to call a special
shareowner meeting. This proposal does not impact our boards current power to call a special meeting.
Dozens of Fortune 500 companies allow 10% of shares to
call a special meeting and this proposal is only asking that 15% of our shares be enabled to call a special meeting. Special meetings allow shareowners to vote on important matters, such as electing new directors that can arise between annual
meetings. Shareowner input on the timing of shareowner meetings is especially important when events unfold quickly and issues may become moot by the next annual meeting. This is important because there could be
15-months
or more between annual meetings.
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Item 8: Special Shareowner Meetings
This proposal is particularly important because we do not have the opportunity to act by written consent.
A majority of Fortune 500 companies provide for shareholders to call special meetings and to act by written consent. Perhaps a proxy advisory firm will recommend that companies like ours, with no written consent opportunity for shareholders, in
turn allow for 10% or 15% of shareholders to call a special meeting.
Now is a good time to adopt this proposal topic since our stock price has been dead money for
the
2-years
leading up to the submission of this proposal.
Please vote to enhance shareholder value:
Special Shareowner Meetings Proposal 8
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Our Board of Directors recommends that you vote
against this proposal for the following reasons:
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The Board believes that this proposal is unnecessary because Verizons shareholders already have a meaningful
right to call a special meeting. Under Verizons bylaws, any individual shareholder who owns at least 10%, or multiple shareholders who together own at least 25%, of Verizons stock may call a special meeting of shareholders. We believe
these thresholds effectively balance this important shareholder right with the appropriate use of Company resources.
Given the size of the Company and our large number of shareholders, a special shareholder meeting is a significant
undertaking that is both expensive and time-consuming. Verizon must pay to prepare, print and distribute legal disclosure documents to shareholders, solicit proxies and tabulate votes. The Board and management must also divert time from the business
to prepare for and conduct the meeting. Given these burdens and cost to the Company, special meetings should be extraordinary events that occur only when an individual shareholder, or group of shareholders, with a substantial percentage of shares
agrees there are extremely pressing matters that must be addressed before the next annual meeting. The Board has carefully considered this issue and firmly believes that the ownership thresholds for individual shareholders and for groups of
shareholders contained in Verizons current bylaw provision strike a proper balance between the right of shareholders to call a special meeting and the interests of the Company and our shareholders in promoting the appropriate use of Company
resources. For these reasons, the Board strongly recommends that you vote against the proposal.
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Item 9: Executive Compensation Clawback Policy
Item 9: Executive Compensation Clawback Policy
Jack K. & Ilene Cohen, owners of 790.6869 shares of Verizons common stock, propose the following:
Executive Compensation Clawback Policy
RESOLVED
: The shareholders urge the Board of Directors to amend the Companys compensation clawback policy, as applied to senior executive officers, to
provide that the Human Resources Committee will review and determine whether to seek recoupment of incentive compensation paid, granted or awarded to a senior executive officer if, in the Committees judgment, there has been conduct resulting
in a violation of law, regulation or Verizon policy that causes significant financial or reputational harm to Verizon, and a senior executive either engaged in the conduct or failed in his or her responsibility to manage or monitor conduct or risks,
with the Company to disclose to shareholders the circumstances of any recoupment and of any decision not to pursue recoupment in the situations described above.
Recoupment includes recovery of compensation already paid, as well as forfeiture, reduction or cancellation of remuneration or unvested equity awards
over which Verizon retains control. These amendments should operate prospectively and be implemented so as not to violate any contract, compensation plan, law or regulation.
SUPPORTING STATEMENT
Verizons Human Resources
Committee has adopted a policy that enables the Company to claw back and cancel certain incentive payments received by an executive who has engaged in financial misconduct (2016 Proxy, page 46).
In our view, a clawback policy limited to financial misconduct is too narrow. We believe that recoupment is an important remedy for other conduct that
does not cause a restatement of financial results, but may harm Verizons reputation and prospects in addition to any financial penalties or loss.
Wells Fargo
is a prime example. Wells Fargo was slapped with a $185 million fine for illegal sales practices that went on for years before Congressional hearings last September finally led the banks board to recover $60 million in stock
grants from two top executives. That step was taken pursuant to a clawback policy of the sort we advocate here. Although the fines and cost of customer restitutions were not material to a bank with $23 billion in earnings, the
reputational harm and impact on future earnings are incalculable.
Like Wells Fargo, Verizon is a consumer-facing company with significant exposure to both
financial and reputational harm from large fines for conduct that violates federal or state laws and regulations.
Recent high-profile regulatory fines paid by
Verizon underscore the need for a stronger policy. In 2015 Verizon agreed to pay $90 million to settle a Federal Communications Commission investigation alleging that Verizon placed unauthorized third-party charges on its customers mobile
phone bills
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a practice called cramming.
Did Verizons board scrutinize the actions of executives
responsible for control failures to see if any incentive compensation should be recouped? If not, why not?
Senior executives should be on notice that their own
compensation is at risk. Incentives influence behavior. And at companies like Verizon, where the vast majority of senior executive compensation is tied to financial performance, we believe incentives not to take undue risks to boost short-term
profitability are appropriate.
Please
VOTE FOR
this proposal.
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Item 9: Executive Compensation Clawback Policy
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Our Board of Directors recommends that you vote
against this proposal for the following reasons:
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Verizons existing clawback policies sufficiently address the objectives of the proposal because they empower
Verizon to hold executives accountable for actions or omissions that result in significant reputational or financial harm to the Company.
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Verizons clawback policy gives Verizon the right to cancel and/or demand reimbursement of incentive compensation from any individual who is a senior executive or above if the Human Resources Committee of the Board
determines that such individual engaged in willful misconduct in connection with the performance of the individuals duties that results in significant reputational or financial harm to the Company. Incentive compensation is broadly defined
under Verizons clawback policy and includes short-term incentives and other performance-based bonuses, and equity and other long-term incentive awards such as equity securities, RSUs, PSUs, phantom equity or other stock-based awards paid,
granted, vested or accrued under any plan or agreement of Verizon or its subsidiaries.
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In addition, all of Verizons employees who receive equity grants under Verizons Long-Term Plan are subject to an additional clawback policy that requires the cancellation and/or repayment of incentive
compensation (both short-term and long-term) if the Committee determines that Verizon was required to materially restate its financial results because of the employees willful misconduct or gross negligence. In addition, outstanding
awards granted under the Long-Term Plan are subject to forfeiture if the employees employment is terminated by Verizon for cause, which includes, for example, a material breach of Verizons Code of Conduct.
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Verizons clawback policies are part of a cohesive set of policies designed to encourage executives to focus on the long-term
interests of Verizons shareholders and discourage excessive risk-taking that could cause significant harm to the Company. For example, Verizons stock ownership guidelines require the CEO to maintain share ownership equal to at least
seven times his base salary and the other named executive officers must maintain share ownership equal to at least four times their base salaries. In addition, Verizons strict anti-hedging policy prohibits all executives who receive
equity-based incentive awards from entering into transactions designed to hedge or offset any decrease in the market value of Verizon stock that they own.
Because Verizons current clawback and other related policies already achieve the objectives of the proposal,
the Board recommends a vote against this proposal.
Item 10: Stock Retention Policy
International Brotherhood of Electrical Workers Pension Benefit Fund, owner of 113,483 shares of Verizons common stock, proposes the following:
RESOLVED:
Shareholders of Verizon Communications Inc. (the Company) urge the Compensation Committee of the Board of Directors (the
Committee) to adopt a policy requiring that senior executives retain a significant percentage of shares acquired through equity compensation programs until reaching normal retirement age or terminating employment with the Company. For
the purpose of this policy, normal retirement
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Item 10: Stock Retention Policy
age shall be defined by the Companys qualified retirement plan that has the largest number of plan participants. The shareholders recommend that the Committee adopt a share retention
percentage requirement of at least 50 percent of net
after-tax
shares. The policy should prohibit hedging transactions for shares subject to this policy which are not sales but reduce the risk of loss to
the executive. This policy shall supplement any other share ownership requirements that have been established for senior executives, and should be implemented so as not to violate the companys existing contractual obligations or the terms
of any compensation or benefit plan currently in effect.
Supporting Statement
: Equity-based compensation is an important component of senior
executive compensation at our Company. While we encourage the use of equity-based compensation for senior executives, we are concerned that our Companys senior executives are generally free to sell shares received from our Companys
equity compensation plans. In our opinion, the Companys current share ownership guidelines for its senior executives do not go far enough to ensure that the Companys equity compensation plans continue to build stock ownership by senior
executives over the long-term.
For example, our Companys share ownership guidelines require the Chief Executive Officer (the CEO)
to hold an amount of shares equivalent to seven times his base salary, or approximately 245,065 shares based on the current trading price. In comparison, the CEO currently owns 1,488,590 shares. In fiscal year 2015, our Company granted the CEO
99,400 restricted shares in addition to performance-based shares with a maximum grant of 298,200. In other words, one years worth of equity awards exceeds the Companys long-term share ownership guidelines for the CEO.
We believe that requiring senior executives to only hold shares equal to a set target loses effectiveness over time. After satisfying these target
holding requirements, senior executives are free to sell all the additional shares they receive in equity compensation.
Our proposal seeks to
better link executive compensation with long-term performance by requiring a meaningful share retention ratio for shares received by senior executives from the Companys equity compensation plans. Requiring senior executives to hold a
significant percentage of shares obtained through equity compensation plans until they reach retirement age will better align the interests of executives with the interests of shareholders and the Company. A 2009 report by the Conference Board Task
Force on Executive Compensation observed that such hold-through-retirement requirements give executives an ever growing incentive to focus on long-term stock price performance as the equity subject to the policy increases
(available at http://www.conference-board.org/pdf_free/ExecCompensation2009.pdf).
We urge shareholders to vote FOR this proposal.
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Item 10: Stock Retention Policy
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Our Board of Directors recommends that you vote
against this proposal for the following reasons:
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While the Board agrees that Verizons executives should own a significant amount of Company stock to align their
interests with those of our shareholders, the Board believes that the proposal is unnecessary because Verizons executive compensation program and policies already accomplish this goal. In addition, as described further below, the Board
believes the proposed policy could be harmful in several respects and is therefore not in the best interests of Verizon or our shareholders.
Verizon has robust stock ownership guidelines.
Under Verizons executive stock ownership guidelines, the CEO must maintain
share ownership equal to at least seven times his base salary and the other named executive officers must maintain share ownership equal to at least four times their base salaries.
The compensation program is designed to ensure executives have significant exposure to the value of Verizons stock throughout
their employment.
Approximately 70% of a senior executives targeted annual compensation opportunity is in the form of long-term incentive awards, which, if they vest, are not payable until three years following the grant date. As a result,
at any given time, a senior executive has three years of unvested equity-based awards, the value of which is partially or wholly dependent on the price of Verizon stock and the dividends on that stock. These unvested incentive awards are not
considered when determining whether an executive has met the required stock ownership requirements.
Verizon has a strict
anti-hedging policy.
Verizons anti-hedging policy prohibits executives who receive equity-based incentive awards from entering into transactions designed to hedge or offset any decrease in the market value of Verizon stock that they own.
The proposed policy could be harmful in several respects.
While the Board believes it is essential that our executives have
a meaningful equity stake in the Company, the Board also believes that executives should not be restricted from responsibly managing their personal financial affairs and diversifying their investment portfolios over the course of their careers. This
is already made more challenging for executives by an internal policy that restricts their trading in Verizon stock to certain limited window periods during the year, and even then, only when they are not in possession of nonpublic information.
Adoption of the proposed policy could cause executives decision making to become unnecessarily conservative, especially as they near retirement. The policy could also put Verizon at a competitive disadvantage in attracting and retaining highly
qualified executives, given that, not surprisingly, the vast majority of large public companies do not require senior executives to retain such a significant share ownership for such an extended period of time.
For all of these reasons, the Board strongly recommends that you vote against this proposal.
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Item 11: Limit Matching Contributions for Executives
Item 11: Limit Matching Contributions for Executives
The Association of BellTel Retirees Inc., owners of 214 shares of the Companys common stock proposes the following:
Matching Contributions to Nonqualified Executive Savings Plan
RESOLVED
: The shareholders of Verizon Communications, Inc. urge our Board of Directors to adopt a policy that prospectively limits the matching contributions
made on behalf of senior executive officers to the Companys
tax-qualified
and nonqualified defined contribution savings plans (the Verizon Management Savings Plan and the Verizon Executive Deferral Plan,
respectively) such that compensation eligible for the 6% Company matching contribution is limited to 100% of eligible base salary and does not include short-term or long-term incentive compensation. This policy should be implemented prospectively
and apply only to senior executive officers in a manner that does not interfere with the contractual rights of any Deferral Plan participant.
SUPPORTING STATEMENT
Verizon continues to offer senior
executive officers far more generous retirement saving benefits than
rank-and-file
managers and other employees receive under the
tax-qualified
saving plans, in our view.
Verizon offers management, including senior executives, a
tax-qualified
Management Savings Plan, which is funded by an executives voluntary contributions and a company match equal to as much as 100% of the first 6% of eligible salary that the participant
contributes.
In addition, there is a supplemental savings plan the Verizon Executive Deferral Plan to which executives can contribute salary
above applicable IRS limits, as well as short-term and long-term incentive compensation without limit. Verizon provides a matching contribution equal to 100% of the first 6% of base salary and of short-term incentive compensation that a
participant contributes, which is in addition to the 6% match on eligible salary contributed to the Management Savings Plan (see 2016 Proxy, pages
53-54).
We believe this structure generates a disproportionately large company match for senior executives who make voluntary contributions.
For example, in 2015 CEO Lowell McAdam received a $19,188 Company contribution to the Management Savings Plan a match equal to 6% of his
tax-eligible
base salary. In addition, McAdam received $390,500 in Company matching contributions to the Deferral Plan, plus $83,000 in above-market earnings on his nonqualified plan assets (see 2016
Proxy, Compensation Tables, pages
47-48).
This $490,000 in total Company contributions and above-market
earnings received by McAdam dwarfed the maximum Company contribution available to managers or other employees participating only in the Savings Plan. Because IRS limits total annual contributions to
tax-qualified
plans, the maximum Company contribution to the Savings Plan was $19,188 in 2015 (the amount received by McAdam and several other senior executive officers). See 2016 Proxy, table, page 48.
In our view, such gross disparities between retirement benefits offered to senior executives and other employees create potential morale problems and reputational
risk. And because these more generous benefits for senior executives are not performance-based, it does nothing to align management incentives with long-term shareholder interests.
Please
VOTE FOR
this proposal.
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Item 11: Limit Matching Contributions for Executives
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Our Board of Directors recommends that you vote
against this proposal for the following reasons:
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The Board strongly objects to the proponents claim that Verizon offers its senior executives
far more generous retirement savings benefits than other management employees by providing disproportionately large company matching contributions to them. In fact, Verizon provides the same matching
opportunity to all of its over 100,000 management employees as it does to its senior executives. All management employees are eligible to receive a matching contribution equal to 100% of the first 6% of eligible pay (which for rank and file
management employees and executives includes both base salary and short-term incentive compensation) they contribute into a savings plan. All management employees also are eligible to receive an additional discretionary profit-sharing
contribution of up to 3% of eligible pay. The Board believes that the proponents assertion that there is a gross disparity between retirement benefits is just plain wrong.
Because the Internal Revenue Code imposes compensation limits on the amount of money that can be deferred into Verizons
tax-qualified
401(k) savings plan, Verizon offers a
non-qualified
savings plan designed to restore benefits that are cut back or limited under the
tax-qualified
401(k) savings plan. Offering this type of
non-qualified
deferral plan to restore benefits that are limited or cut back due to the Internal Revenue
Code limits is a common and competitive practice amongst Verizons peer companies. The Board believes that all employees should have an equal opportunity to save appropriately for retirement, and
the non-qualified
savings plan allows participants to proportionately replace the same percentage of income in retirement as all other Verizon management employees.
In 2006 Verizon froze all future pension accruals under its management retirement plans, so the opportunity to
receive a matching contribution on eligible pay contributed by the individual into the Companys
tax-qualified
savings plan and
non-qualified
deferral plan is the
only retirement benefit that Verizon offers to its executives. Contrary to the Proponents claim, there is a link between this retirement benefit for senior executives and long-term shareholder interests because the matching contributions made
under the non-qualified deferral plan are automatically invested in the Verizon stock fund. By contrast, participants in the qualified savings plan have the right to direct the investment of the matching contributions they receive. In addition, the
discretionary annual profit-sharing contribution is performance-based and determined using the same criteria as the Short-Term Plan award. For the reasons outlined above, the Board believes that the proposal is not in the best interests of Verizon
and our shareholders.
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Additional Information
Additional Information about the Annual Meeting
Meeting details
Date and location
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Thursday, May 4, 2017
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8:30 a.m., local time
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Dallas Marriott Las Colinas
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223 West Las Colinas Boulevard
Irving,
Texas 75039
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Admission
Only Verizon shareholders as of the record date, March 6, 2017, may attend the meeting. You will need an admission ticket
or other proof of stock ownership as well as photo identification to be admitted.
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If you are a registered shareholder, an admission ticket is attached to your proxy card or Notice of Internet Availability of Proxy Materials, or may be printed after you submit your vote online. If you plan to attend
the meeting, please vote your proxy ahead of time but retain the admission ticket and bring it with you to the meeting.
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If you hold your shares in the name of a bank, broker or other institution, you may obtain an admission ticket at the meeting by presenting proof of your ownership of Verizon common stock. For example, you may bring
your account statement or a letter from your bank or broker confirming that you owned Verizon common stock on March 6, 2017, the record date for the meeting.
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The Dallas Marriott Las Colinas is accessible to all shareholders. If you require any special
accommodations, please mail your request to the Assistant Corporate Secretary at the address shown under Contacting Verizon no later than April 14, 2017.
For safety and security reasons, we do not permit anyone to bring large bags, briefcases or packages into the meeting room or to record or photograph the meeting.
This proxy statement and the 2016 Annual Report are available at
www.edocumentview.com/vz
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If you are a registered holder, you can also view or download these materials when you vote online at
www.envisionreports.com/vz
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Additional Information
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Voting procedures and results
Voting procedures and results
Who may vote?
Shareholders of record as of the
close of business on March 6, 2017, the record date, may vote at the meeting. As of March 6, 2017, there were approximately 4.08 billion shares of common stock outstanding and entitled to vote.
How do I vote my shares?
Registered Shares
. If you hold your shares in your own name, you may vote by proxy in four convenient ways:
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Online
Go to
www.envisionreports.com/vz
and follow
the instructions. You will need to enter certain information that is printed on your proxy card or Notice of Internet Availability of Proxy Materials or included in your email notification. You can also use this website to elect to be notified by
email that future proxy statements and annual reports are available online instead of receiving printed copies of those materials by mail.
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Phone
Call toll-free
1-800-652-VOTE
(8683) within the United States, U.S. territories and Canada and follow the instructions. You will need to provide certain information that is
printed on your proxy card or Notice of Internet Availability of Proxy Materials or included in your email notification.
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Mail
Complete, sign and date your proxy card and return it
in the envelope provided. If you plan to attend the Annual Meeting, please retain the admission ticket attached to the proxy card.
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In person
You may also vote in person at the meeting as
long as your shares are not held through the Verizon Savings Plan and you follow any applicable instructions.
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Verizon Savings Plan shares.
If you are or were an employee and hold shares in a current or former Verizon savings plan, the
proxy that you submit will provide your voting instructions to the plan trustee. You may vote online, by telephone or by returning the proxy card in the envelope provided. You may attend the annual meeting, but you cannot vote your savings plan
shares in person. If you do not submit a proxy, the plan trustee will vote your plan shares in the same proportion as the shares for which the trustee receives voting instructions from other participants in that plan. To allow sufficient time
for the savings plan trustees to tabulate the vote of the plan shares, your vote must be received before the close of business on May 1, 2017.
Street
name shares.
If you hold shares through a bank, broker or other institution, you will receive material from that firm explaining how to vote.
How does voting by proxy work?
By giving us your proxy, you authorize the proxy committee to vote your shares in accordance with the
instructions you provide. You may vote for or against any or all of the Director candidates and any or all of the other proposals (except for the proposal on the frequency of the
say-on-pay
vote, which gives you three frequency options). You may also abstain from voting.
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Additional
Information
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Voting procedures and results
Your proxy provides voting instructions for all Verizon shares that are registered in your name on March 6,
2017 and all shares that you hold in a current or former Verizon savings plan or in your Verizon Direct Invest Plan account.
If you return your
signed proxy card but do not specify how to vote, the proxy committee will vote your shares in favor of the Director candidates listed on the proxy card, in favor of the ratification of the independent registered public accounting firm, in favor of
the advisory vote to approve executive compensation, in favor of holding an advisory vote on executive compensation each year, and in favor of the approval of Verizons 2017 Long-Term Incentive Plan. Unless instructed otherwise, the proxy
committee will vote your shares against the six shareholder proposals. The proxy committee also has the discretionary authority to vote your shares on any other matter that is properly brought before the annual meeting. You may designate a proxy
other than the proxy committee by striking out the name(s) of the proxy committee and inserting the name(s) of your chosen representative(s). The representative(s) you designate must present the signed proxy card at the meeting in order for your
shares to be voted.
Can I change my vote?
Registered shares.
If you hold your shares in your own name, you can revoke your proxy before it is exercised by delivering a written notice to the Corporate
Secretary at the address given under Contacting Verizon. You can change your vote by voting again online or by telephone or by returning a later-dated proxy card to Computershare Trust Company, N.A. at the address given under
Contacting Verizon. Your changed vote must be received before the polls close at the annual meeting. You can also change your vote by voting in person at the annual meeting.
Verizon Savings Plan shares.
If you hold shares in a current or former Verizon savings plan, you can change your voting instructions for those shares by voting
again online or by telephone or by returning a later-dated proxy card to Computershare Trust Company, N.A. at the address given under Contacting Verizon. To allow sufficient time for the savings plan trustees to tabulate the vote of the
plan shares, your changed vote must be received before the close of business on May 1, 2017.
Street name shares
. If you hold your shares through a bank,
broker or other institution, please check with that firm for instructions on how to revoke your proxy or change your vote.
What vote is
required to elect a Director or approve a proposal?
Directors are elected by a majority of the votes cast in an uncontested election. For the vote on
the frequency of future
say-on-pay
votes, we will consider the option that receives the most votes cast to be the preference of our shareholders. The affirmative vote of
a majority of the votes cast is required to approve each of the other management and shareholder proposals.
In order to officially conduct the meeting, we must
have a quorum present. This means that at least a majority of the outstanding shares of Verizon common stock that are eligible to vote must be represented at the meeting either in person or by proxy. If a quorum is not present, we will reschedule
the annual meeting for a later date.
How are the votes counted?
Each share is entitled to one vote on each Director and on each matter presented at the annual meeting. Shares owned by Verizon, which are called treasury shares, do
not count toward the quorum and are not voted.
Abstentions
. Under our bylaws, we do not count abstentions in determining the total number of votes cast on
any item. We only count abstentions in determining whether a quorum is present. This means that abstentions have no effect on the election of Directors or on the outcome of the vote on any proposal.
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Additional Information
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Voting procedures and results
Failures to vote.
Failures to vote will have no effect on the election of Directors or on the outcome of the
vote on any proposal.
Broker
non-votes.
The failure of a bank, broker or other institution to cast a vote with
respect to any proposal (for example, because it did not receive voting instructions from the beneficial owner) will have the same effect as a failure to vote.
Is my vote confidential?
It is our policy to maintain the confidentiality of proxy cards, ballots and voting tabulations that
identify individual shareholders, except where disclosure is required by law and in other limited circumstances.
Where can I find the
voting results of the annual meeting?
We will report the voting results on a Current Report on Form
8-K
filed
with the SEC no later than May 10, 2017. We will also post the voting results on the Corporate Governance section of our website at
www.verizon.com/about/investors
promptly after the meeting.
Who tabulates and certifies the vote?
Computershare Trust Company, N.A. will tabulate the vote, and independent inspectors of election will certify the results.
Proxy materials
May I receive my materials
electronically?
We encourage registered shareholders to sign up for electronic delivery of future proxy materials.
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You may sign up when you vote online at
www.envisionreports.com/vz
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If you have enrolled in Computershares Investor Center, you may sign up by accessing your account at
www.computershare.com/verizon
and clicking on My Profile and then Communication
Preference.
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Once you sign up for electronic delivery, you will no longer receive a printed copy of the proxy materials unless you specifically
request one. Each year you will receive an email explaining how to access the proxy materials online as well as how to vote your shares online. You may suspend electronic delivery of the proxy materials at any time by contacting Computershare by one
of the methods described under Contacting Verizon.
There are several shareholders at my address. Why did we receive only one
set of proxy materials?
For registered shareholders, we have adopted a procedure called householding that was approved by the SEC. This
means that we send only one copy of the proxy statement and annual report to any registered shareholders sharing the same last name and home address, regardless of how many shareholders reside at that address, unless a shareholder submits a request
to Computershare to receive individual copies using one of the methods shown under Contacting Verizon.
If you would like to receive individual copies
of the proxy materials, we will provide them promptly. Please send your request to Computershare using one of the methods shown under Contacting Verizon. Householding does not apply to shareholders who have signed up for electronic
delivery of proxy materials.
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92
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Verizon
2017 Proxy Statement
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Additional
Information
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Proxy materials
Why am I receiving more than one set of proxy materials?
You may be receiving more than one set of proxy materials in your household because:
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You and another member of your household are both registered shareholders;
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You are a registered shareholder and also hold shares through a bank, broker or other institution;
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You hold shares through more than one bank, broker or other institution; or
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You and another member of your household hold shares through different banks, brokers or institutions.
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You may request
a single set of proxy materials as described below, but in order to vote all of your shares, you and any other member of your household will need to follow the voting instructions provided on each proxy card or Notice of Internet Availability of
Proxy Materials or email notification that you receive, whether it comes from Computershare or from a bank, broker or other institution.
How can I request a single set of proxy materials for my household?
If you are a registered shareholder and you are receiving more than one set of proxy materials, please contact Computershare by one of the methods shown under
Contacting Verizon to request a single set. This request will become effective approximately 30 days after receipt and will remain in effect for future mailings unless you or another registered shareholder within your household changes
the instruction or provides Computershare with a new mailing address.
If you hold your shares through a broker, bank or other institution, you can contact that
firm to request a single set of proxy materials from that firm.
Who is Verizons proxy solicitor?
Georgeson Inc. is helping us distribute proxy materials and solicit votes for a base fee of $20,000, plus reimbursable expenses and customary charges. In addition to
solicitations by mail, Verizon employees and the proxy solicitor may solicit proxies in person or by telephone. Verizon will bear the cost of soliciting proxies.
Shareholder proposals
How do I submit a shareholder
proposal to be included in the proxy statement for next years annual meeting?
Any shareholder may submit a proposal to be included in the proxy
statement for the 2018 Annual Meeting of Shareholders by sending it to the Assistant Corporate Secretary at Verizon Communications Inc., 1095 Avenue of the Americas, New York, New York 10036. We must receive the proposal no later than
November 20, 2017. We are not required to include any proposal in our proxy statement that we receive after that date or that does not comply with applicable SEC rules.
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2017 Proxy
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93
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Additional Information
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Shareholder proposals
How do I nominate a Director to be included in the proxy statement for next years annual
meeting?
Under the proxy access provisions of our bylaws, shareholders can include their own nominee for Director in our proxy
materials, along with the Board-nominated candidates. Any shareholder or group of up to 20 shareholders who have maintained continuous qualifying ownership of at least 3% or more of Verizons outstanding common stock for at least the previous
three years may include a specified number of Director nominees in our proxy materials. The bylaws require that the shareholder proponents:
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Notify us in writing between October 21, 2017 and November 20, 2017; and
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Provide the additional required information and comply with the other requirements contained in our bylaws.
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How do I otherwise nominate a Director or bring other business before next years annual meeting?
Under our bylaws, a
shareholder may nominate an individual to serve as a Director or bring other business before the 2018 Annual Meeting of Shareholders. The bylaws require that the shareholder:
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Notify us in writing between January 4, 2018, and February 3, 2018;
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Include his or her name, record address and Verizon share ownership;
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Include specific information about the shareholder proponent, any beneficial owner, and any nominee and their respective affiliates and associates, and provide specified agreements by certain of those parties; and
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Update this information as of the record date and after any subsequent change.
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The notice required for any such
nomination must be sent to the Assistant Corporate Secretary at Verizon Communications Inc., 1095 Avenue of the Americas, New York, New York 10036. Shareholders may request a copy of the bylaw requirements by writing to the Assistant Corporate
Secretary at that address.
Must a shareholder proponent appear personally at the annual meeting to present his or her proposal?
A shareholder proponent or the proponents qualified representative must attend the meeting to present the proposal. Under our bylaws, in the event
a qualified representative of a shareholder proponent will appear at the annual meeting to present the proposal, the shareholder proponent must provide notice of the designation, including the identity of the representative, to the Assistant
Corporate Secretary at the address specified under Contacting Verizon at least 48 hours prior to the meeting.
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Contacting Verizon
How to contact Verizon
If you need more information about the annual
meeting or would like copies of any of the materials posted on the Corporate Governance section of our website, please write to:
Assistant Corporate Secretary
Verizon Communications Inc.
1095 Avenue of the Americas
New York, New York 10036
How to contact Verizons transfer agent
If you are a registered shareholder, please direct all questions concerning your proxy card or voting procedures to our transfer agent, Computershare Trust Company,
N.A. You should also contact Computershare if you have questions about your stock account, stock certificates, dividend checks or transferring ownership. Computershare can be reached:
By mail:
Verizon
Communications Shareowner Services
c/o Computershare
P.O. Box 43078
Providence, Rhode Island 02940-3078
By email:
verizon@computershare.com
By telephone:
1-800-631-2355
(U.S.)
1-866-725-6576
(International)
Online:
www.computershare.com/verizon
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Verizon
2017 Proxy
Statement
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Other Business
Verizon is not aware of any other matters that will be presented at the annual meeting. If other matters are properly introduced, the proxy committee will vote the
shares it represents in accordance with its judgment.
By Order of the Board of Directors,
William L. Horton, Jr.
Senior Vice President,
Deputy General Counsel and
Corporate Secretary
March 20, 2017
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96
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Verizon
2017 Proxy Statement
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Appendices
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Appendix A
Appendix A
Reconciliation of
Non-GAAP
Measures
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Adjusted Net Income Reconciliation
Year Ended December 31,
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(dollars in billions)
2016
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Reported Net Income Attributable to Verizon
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$
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13.1
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Severance, Pension and Benefit Charges
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1.8
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Gain on Spectrum License Transactions
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(0.1
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)
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Early Debt Redemption Costs
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1.1
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Gain on Sale of Divested Businesses
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(0.1
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)
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Adjusted Net Income Attributable to Verizon
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$
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15.8
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Controlling Interest Income due to Wireless Transaction
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$
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(7.8
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)
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Wireless Transaction Costs
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1.6
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Adjusted Net Income excluding Wireless Transaction Impact
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$
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9.6
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Note: Adjusted Net Income Attributable to Verizon excluding Wireless Transaction Impact includes adjustments for net
income attributable to non-controlling interest and interest expense as if Verizon had not completed the transaction to acquire sole ownership of Verizon Wireless (Wireless Transaction).
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Adjusted EPS Reconciliation
Years Ended December 31,
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2015
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2016
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Reported EPS
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$
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4.37
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$
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3.21
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Severance, Pension and Benefit Charges (Credits)
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(0.34
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)
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0.44
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Gain on Spectrum License Transactions
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(0.04
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)
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(0.02
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)
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Gain on Sale of Divested Businesses
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(0.03
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)
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Early Debt Redemption Costs
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0.27
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Adjusted EPS
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$
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3.99
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$
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3.87
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Note: EPS may not add due to rounding.
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Free Cash Flow Reconciliation for Short-Term Incentive Plan
Year Ended December 31,
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(dollars in billions)
2016
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Net Cash Provided by Operating Activities
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$
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22.7
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Net Cash Provided by Device Payment Plan Receivable Securitizations
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5.0
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Less: Capital Expenditures (including capitalized software)
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17.1
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Adjusted Free Cash Flow
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$
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10.6
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Verizon
2017 Proxy
Statement
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A-1
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Appendices
|
Appendix A
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Free Cash Flow Reconciliation for Long-Term Incentive Plan
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(dollars in billions)
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Year Ended December 31,
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2014
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2015
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2016
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Net Cash Provided by Operating Activities
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$
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30.6
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$
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38.9
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$
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22.7
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Net Cash Provided by Device Payment Plan Receivable Securitizations
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5.0
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Less: Capital Expenditures (including capitalized software)
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17.2
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17.7
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17.1
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Less: Proceeds from Monetization of Tower Assets
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2.4
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Add: Cash Impact from Sale of Divested Businesses
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4.0
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Adjusted Free Cash Flow*
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$
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13.4
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$
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18.8
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$
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14.7
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*
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May not add due to rounding.
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Note: Cumulative Adjusted Free Cash Flow represents the sum of the three years presented.
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Adjusted Equity and Return on Equity (ROE) Reconciliation
Year Ended December 31,
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(dollars in billions)
2016
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Average Reported Equity
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$
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19.8
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Severance, Pension and Benefit Charges
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1.3
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Gain on Spectrum License Transactions
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(0.1
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)
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Early Debt Redemption Costs
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0.8
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Gain on Sale of Divested Businesses
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(0.1
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)
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Average Reported Equity in accordance with the terms of the Short-Term Plan*
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21.8
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Impact of Wireless Transaction
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19.2
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Average Adjusted Equity excluding Wireless Transaction Impact
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$
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41.0
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Reported ROE %**
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66.3%
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Reported ROE - Short-Term Plan %**
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72.3%
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Adjusted ROE %**
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23.3%
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Note: Equity averages have been computed using the period end balances for a thirteen-month period spanning from December 2015 to December
2016. Impact of Wireless Transaction is a cumulative adjustment of all of the impacts to Verizon equity since February 2014 as if Verizon had not completed the Wireless Transaction and is also on a thirteen-month weighted average basis from December
2015 to December 2016.
*
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May not add due to rounding.
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**
|
Quotient may not compute due to rounding.
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Total Revenue Reconciliation
Year Ended December 31,
|
|
(dollars in billions)
2016
|
|
Total Revenue
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$
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126.0
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Less: Revenue from Divested Businesses
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(1.3
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)
|
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Adjusted Total Revenue
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$
|
124.7
|
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|
|
|
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A-2
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Verizon
2017 Proxy Statement
|
Appendices
|
Appendix B
Appendix B
2017 Verizon Communications Inc.
Long-Term Incentive Plan
Contents
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B-2
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Article 1.
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Effective Date, Objectives, and Duration
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B-2
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Article 2.
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Definitions
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B-5
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Article 3.
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Administration
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B-5
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Article 4.
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Shares Subject to the Plan and Maximum Awards
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B-7
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Article 5.
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Eligibility and Participation
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B-7
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Article 6.
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Stock Options
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B-8
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Article 7.
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Restricted Stock and Restricted Stock Units
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B-9
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Article 8.
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Performance Units and Performance Shares
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B-10
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Article 9.
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Other Awards
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B-11
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Article 10.
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Award Agreements
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B-11
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|
Article 11.
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Qualified Performance-Based Awards
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|
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B-13
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|
Article 12.
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Beneficiary Designation
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|
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B-13
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|
Article 13.
|
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Deferrals
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|
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B-13
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|
Article 14.
|
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No Right to Employment or Participation
|
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|
B-13
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|
Article 15.
|
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Change in Control
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B-1
4
|
|
Article 16.
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Amendment, Modification, and Termination
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|
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B-14
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Article 17.
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Withholding
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B-14
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Article 18.
|
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Stock-Based Awards in Substitution for Awards Granted by Other Corporation
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B-15
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|
Article 19.
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Clawback Policy and Other Policies
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|
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B-15
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Article 20.
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Successors
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|
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B-15
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|
Article 21.
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|
Legal Construction
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|
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|
Verizon
2017 Proxy
Statement
|
|
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B-1
|
Appendices
|
Appendix B
Article 1. Effective Date, Objectives, and Duration
1.1 Effective Date of the Plan.
Verizon Communications Inc., a Delaware corporation (hereinafter referred to as the Company), maintains this 2017
Verizon Communications Inc. Long-Term Incentive Plan (the Plan). The Companys Board of Directors approved the Plan on February 2, 2017 (the Effective Date), with such approval subject, however, to approval by the
Companys shareholders not later than one year after the Effective Date.
The Plan permits the grant of Nonqualified Stock Options, Incentive Stock Options,
Restricted Stock, Restricted Stock Units, Performance Shares, Performance Units, and Other Awards, including Stock Appreciation Rights.
1.2 Objectives of the
Plan.
The objectives of the Plan are to provide the Company with the flexibility to grant Awards that help align Participants interests with those of the Companys shareholders; to provide Participants with incentives for excellence
in performance; to provide flexibility to the Company in its ability to motivate, attract, and retain the services of Participants who make significant contributions to the Companys success; and to allow Participants to share in the success of
the Company.
1.3 Duration of the Plan.
The Plan shall commence on the Effective Date and shall remain in effect, subject to the right of the Committee
to amend or terminate the Plan at any time pursuant to Article 16 hereof, until all Shares subject to the Plan shall have been purchased, acquired, or forfeited, and all cash Awards shall have been paid or forfeited, pursuant to the Plans
provisions. In no event, however, may an Award be granted more than ten (10) years after the Effective Date.
Article 2. Definitions
Whenever the following terms are used in the Plan, with their initial letter(s) capitalized, they shall have the meanings set forth below:
2.1
2009 Plan
means the 2009 Verizon Communications Inc. Long-Term Incentive Plan, as amended from time to time.
2.2
Award
means, individually or collectively, a grant under the Plan of Nonqualified Stock Options, Incentive Stock Options, Restricted
Stock, Restricted Stock Units, Performance Shares, Performance Units, or Other Awards.
2.3
Award Agreement
means an agreement
entered into by the Company and a Participant, or another instrument (which, for clarity, includes any electronic notice of grant) prepared by the Company in lieu of such an agreement, setting forth the terms and conditions applicable to an Award
pursuant to Article 10 hereof.
2.4
Beneficial Owner
or
Beneficial Ownership
shall have the meaning ascribed to such
term in Rule
13d-3 of
the General Rules and Regulations under the Exchange Act, as amended from time to time, or any successor rule.
2.5
Board
or
Board of Directors
means the Board of Directors of the Company.
2.6
Change in Control
means a change in control of the Company of a nature that would be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A promulgated under the Exchange Act, whether or not the Company is then subject to such reporting requirement; provided that, without limitation, such a Change in Control shall be deemed to have occurred if:
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(a)
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Any Person becomes a Beneficial Owner of shares of one or more classes of stock of the Company representing twenty percent (20%) or more of the total voting power of the Companys then outstanding voting stock; or
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|
(b)
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The Company and any Person consummate a merger, consolidation, reorganization, or other business combination; or
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(c)
|
The Board adopts resolutions authorizing the liquidation or dissolution, or sale to any Person of all or substantially all of the assets, of the Company.
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|
|
B-2
|
|
|
Verizon
2017 Proxy Statement
|
Appendices
|
Appendix B
Notwithstanding the provisions of Section 2.6 (a), (b), and (c) hereof, a Change in Control shall not occur
if:
|
(i)
|
The Companys voting stock outstanding immediately before the consummation of the transaction will represent no less than forty-five percent (45%) of the combined voting power entitled to vote for the election of
directors of the surviving parent corporation immediately following the consummation of the transaction; and
|
|
(ii)
|
Members of the Incumbent Board will constitute at least
one-half
of the board of directors of the surviving parent corporation; and
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(iii)
|
The Chief Executive Officer or
co-Chief
Executive Officer of the Company will be the chief executive officer or
co-chief
executive officer
of the surviving parent corporation; and
|
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(iv)
|
The headquarters of the surviving parent corporation will be located in New York, New York.
|
For the purposes of this
Section 2.6, Person means any corporation, partnership, firm, joint venture, association, individual, trust, or other entity, but does not include the Company or any of its wholly-owned or majority-owned subsidiaries, employee
benefit plans, or related trusts; and Incumbent Board means those persons who either (A) have been members of the Board of Directors of the Company since January 1, 2017, or (B) are new Directors whose election by the
Board of Directors or nomination for election by the shareholders of the Company was approved by a vote of at least three-fourths of the members of the Incumbent Board then in office who either were Directors described in clause (A) hereof or
whose election or nomination for election was previously so approved, but shall not include any Director elected as a result of an actual or threatened solicitation of proxies by any Person.
2.7
Code
means the Internal Revenue Code of 1986, as amended from time to time.
2.8
Committee
means the Human Resources Committee of the Board or any other committee (or the Board, if the Board so determines) appointed by
the Board to administer the Plan.
2.9
Company
means Verizon Communications Inc., a Delaware corporation, and any successor thereto as
provided in Article 18 hereof.
2.10
Director
means any individual who is a member of the Board.
2.11
Effective Date
shall have the meaning ascribed to such term in Section 1.1 hereof.
2.12
Employee
means any employee of the Company or of a Subsidiary. Directors who are employed by the Company or by a Subsidiary shall be
considered Employees under the Plan.
2.13
Exchange Act
means the Securities Exchange Act of 1934, as amended from time to time, or any
successor statute.
2.14
Fair Market Value
means the closing price of Shares on the principal securities exchange on which the Shares are
traded or, if there are no such sales on the relevant date, then the closing price of Shares on the date or dates that the Committee determines, in its sole discretion, to be appropriate for purposes of valuation.
2.15
Freestanding SAR
means an SAR that is granted independently of any Option, as described in Sections 9.3 through 9.7 hereof.
2.16
Incentive Stock Option
or
ISO
means an Option that is designated by the Committee as an Incentive Stock Option.
2.17
Insider
means an individual who is determined by the Company to be subject to the reporting requirements of Section 16(a) of
the Exchange Act on the relevant date.
2.18
Non-Employee
Director
means (a) a Director who
is not an Employee or (b) a member of the board of directors (or comparable governing body) of a Subsidiary who is not an Employee.
2.19
Nonqualified Stock Option
or
NQSO
means an Option that is not designated by the Committee as an Incentive Stock Option.
|
|
|
Verizon
2017 Proxy
Statement
|
|
|
B-3
|
Appendices
|
Appendix B
2.20
Option
means an Incentive Stock Option or a Nonqualified Stock Option granted pursuant
to Article 6 hereof.
2.21
Option Price
means the price at which a Share may be purchased by a Participant pursuant to an
Option, as provided in Section 6.2 hereof.
2.22
Other Award
means an Award granted to a Participant pursuant to Article 9
hereof.
2.23
Participant
means an Employee or
Non-Employee
Director who has been selected to
receive an Award or who holds an outstanding Award.
2.24
Performance-Based Exception
means the performance-based exception from the tax
deductibility limitation imposed by Code Section 162(m)(4)(C) and the Treasury regulations thereunder.
2.25
Performance Period
means
the period during which performance goals must be met for purposes of Article 8 hereof.
2.26
Performance Share
(also referred
to as
Performance Stock
) means an Award granted pursuant to Article 8 hereof, which, on the date of grant, shall have a value equal to the Fair Market Value of a Share on that date.
2.27
Performance Unit
means an Award granted pursuant to Article 8 hereof, which, on the date of grant, shall have a value equal to not
less than the Fair Market Value of a Share on that date.
2.28
Plan
means the 2017 Verizon Communications Inc. Long-Term Incentive Plan as
set forth herein and as it may be amended from time to time.
2.29
Qualified Performance-Based Award
shall have the meaning ascribed to
such term in Article 11 hereof.
2.30
Restricted Stock
means an Award granted pursuant to Section 7.1 hereof.
2.31
Restricted Stock Unit
means an Award granted pursuant to Section 7.5 hereof.
2.32
Restriction Period
means the period during which the transfer of Shares of Restricted Stock is limited in some way (based on the passage
of time, the achievement of performance goals, or the occurrence of other events determined by the Committee in its discretion), and the Shares are subject to a substantial risk of forfeiture, as provided in Article 7 hereof.
2.33
Share
means a share of common stock of the Company.
2.34
Share Pool
means the number of Shares available for grant under the Plan as provided in Section 4.1 hereof, as adjusted
pursuant to Sections 4.2 and 4.3 hereof.
2.35
Shareholder Approval Date
means the date the Plan is approved by the Companys
shareholders.
2.36
Stock Appreciation Right
or
SAR
means an Award, granted either alone or in connection with a
related Option, pursuant to the terms of Sections 9.3 through 9.7 hereof.
2.37
Subsidiary
means (a) a corporation, partnership,
joint venture, or other entity in which the Company has an ownership interest of at least fifty percent (50%), and (b) any corporation, partnership, joint venture, or other entity in which the Company holds an ownership interest of less than
fifty percent (50%) but which, in the discretion of the Committee, is treated as a Subsidiary for purposes of the Plan.
2.38
Tandem
SAR
means an SAR granted with respect to a Share pursuant to Sections 9.3 through 9.7 hereof in connection with a related Option, under which (a) the exercise of the SAR with respect to the Share shall cancel the right to
purchase such Share under the related Option and (b) the purchase of the Share under the related Option shall cancel the right to exercise the SAR with respect to such Share.
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Article 3. Administration
3.1 General
.
The Plan shall be administered by the Committee which, except as otherwise determined by the Board in its discretion, shall consist
exclusively of two (2) or more Directors who the Board has determined are (a) nonemployee directors within the meaning of the rules promulgated by the Securities and Exchange Commission under Section 16 of the Exchange Act and
(b) outside directors within the meaning of Code Section 162(m) and the related regulations under the Code. The members of the Committee shall be appointed from time to time by, and shall serve at the discretion of, the Board. The
Committee shall have the authority to delegate administrative duties, including the authority to respond to and decide claims or appeals under the Plan and to interpret the Plan terms, to the Executive Vice President and Chief Administrative Officer
of the Company (or other executive officer of the Company as may be specified by the Committee from time to time). The Committee may not delegate its authority with respect to
(a) non-ministerial
actions
with respect to Insiders;
(b) non-ministerial
actions with respect to Awards that are intended to qualify for the Performance-Based Exception; and (c) certifying that any performance goals and other
material terms attributable to Awards intended to qualify for the Performance-Based Exception have been satisfied.
3.2 Authority of the Committee.
Except as
limited by law or by the Certificate of Incorporation or Bylaws of the Company, and subject to the provisions hereof, the Committee shall have full power in its discretion to select Employees who shall participate in the Plan; determine the sizes
and types of Awards; determine the terms and conditions of Awards; establish the installment(s) (if any) in which Awards shall become exercisable or shall vest (which may include, without limitation, performance and/or time-based vesting
requirements), or determine that no delayed exercisability or vesting is required, determine the extent (if any) to which any applicable exercise and vesting requirements have been satisfied, and establish the events (if any) of termination,
expiration or reversion of Awards; determine the price (if any) for the Awards or the Shares acquired under an Award (which price may be paid in cash, Shares, or any other form of lawful consideration, as determined by the Committee);
accelerate, waive or extend the vesting or exercisability, or modify or extend the term of, any or all outstanding Awards (in the case of Options or SARs, within the maximum
ten-year
term of such awards);
determine the date of grant of an Award, which may be a designated date after but not before the date of the Committees action to approve the Award (unless otherwise designated by the Committee, the date of grant of an Award shall be the date
upon which the Committee took the action approving the Award); determine whether, and the extent to which, adjustments are required pursuant to Section 4.2; construe and interpret the Plan and any Award Agreement or other agreement or
instrument entered into or issued under the Plan; establish, amend, or waive rules and regulations for the Plans administration; and (subject to the provisions of Article 16 hereof) amend the terms and conditions of or waive any of
the Companys rights with respect to any outstanding Award. Further, the Committee shall make all other determinations that may be necessary or advisable for the administration of the Plan.
3.3 Decisions Binding.
All determinations and decisions made by the Committee pursuant to the provisions of the Plan and all related orders and resolutions of
the Committee shall be final, conclusive, and binding on all persons, including the Company, its shareholders, Directors,
Non-Employee
Directors, Employees, Participants, and their estates and beneficiaries.
Article 4. Shares Subject to the Plan and Maximum Awards
4.1 Number of Shares Available for Grants.
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(a)
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Shares that may be issued pursuant to Awards may be either authorized and unissued Shares, or authorized and issued Shares held in the Companys treasury, or any combination of the foregoing.
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(b)
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Subject to adjustment as provided in Section 4.3 hereof, there shall be reserved for issuance under Awards granted
under the Plan a number of Shares (the Share Pool) determined as the sum of: (i) the number of Shares available for additional award grant purposes under the 2009 Plan as of the
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Shareholder Approval Date and determined immediately prior to the termination of the authority to grant new awards under the 2009 Plan as of that date; plus (ii) the number of Shares subject
to any restricted stock awards, restricted stock unit awards, performance share awards, or other awards granted under the 2009 Plan and outstanding on the Shareholder Approval Date (or any applicable portion of such awards) that, after the
Shareholder Approval Date, are paid in the form of cash (if originally awarded in Shares and such Shares were counted against the Share Pool under the 2009 Plan on the Shareholder Approval Date); plus (iii) the number of Shares
subject to any restricted stock awards, restricted stock unit awards, performance share awards, or other awards granted under the 2009 Plan and outstanding on the Shareholder Approval Date (or any applicable portion of such awards) that, after the
Shareholder Approval Date, are cancelled, terminated, expire or are forfeited or any reason.
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Of the total number of Shares in the Share Pool, not more than 20,000,000 of such Shares shall be available for issuance pursuant to the exercise of Incentive Stock Options.
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(d)
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The maximum aggregate number of Shares with respect to which all Awards may be granted in a single calendar year to an individual Participant may not exceed 3,000,000 Shares. The maximum aggregate number of Shares with
respect to which Options and SARs may be granted in a single calendar year to an individual Participant may not exceed 3,000,000 Shares.
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4.2 Share
Pool Adjustments.
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(a)
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The following Awards and payouts shall reduce, on a
Share-for
Share basis, the number of Shares available for issuance under the Share Pool:
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(1)
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An Award of an Option;
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(2)
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An Award of an SAR (except a Tandem SAR);
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(3)
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An Award of Restricted Stock;
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(4)
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An Award of a Restricted Stock Unit payable in Shares;
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(5)
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An Award of a Performance Share;
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(6)
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An Award of a Performance Unit payable in Shares; and
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Other Awards payable in Shares.
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(b)
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The following transactions shall restore, on a
one-for-one
basis, the number of Shares available for issuance under the Share
Pool:
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(1)
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A payout of an SAR, Restricted Stock Award, Restricted Stock Unit, Performance Unit, Performance Share, or Other Award, in each case in the form of cash if originally awarded in Shares; and
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(2)
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A cancellation, termination, expiration, or forfeiture for any reason (with the exception of the termination of a Tandem SAR upon exercise of the related Option, or the termination of a related Option upon exercise of
the corresponding Tandem SAR) of any Award payable in Shares or Shares subject to an Award.
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However, Shares used to pay an Option
Price or tax withholding obligation with respect to an Award (including, for this purpose, any Shares used to pay an Option Price or tax withholding obligation with respect to an award granted under the 2009 Plan) after the Effective Date shall not
be added back to the Share Pool (regardless of whether the Shares so used were previously acquired Shares or Shares withheld that otherwise would have been acquired on exercise or payment of the Award). In addition, the total number of Shares
subject to the portion of a stock-settled SAR that is exercised shall not be added back to the Share Pool regardless of whether a lesser number of Shares is actually delivered upon the exercise of the SAR. The Company may not increase the Shares
available for issuance under the Share Pool by repurchasing Shares on the market (by using cash received through the exercise of Options or otherwise).
4.3
Required Adjustments in Authorized Shares.
In the event of any change in corporate capitalization, such as a stock split, or a corporate transaction, such as any merger, consolidation, separation, including a
spin-off,
or other distribution of stock or property of the Company, any reorganization (whether or not such
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reorganization comes within the definition of such term in Code Section 368) or any partial or complete liquidation of the Company, such adjustment shall be made in the number and class of
Shares available for grants under Section 4.1 hereof, in the number and class of and/or price of Shares subject to outstanding Awards, and in the
per-Participant
Award limits set forth in Section 4.1
hereof, as determined to be appropriate and equitable by the Committee, to prevent dilution or enlargement of the benefits available under the Plan and of the rights of Participants; provided that the number of Shares subject to any Award shall
always be a whole number. In a
stock-for-stock
acquisition of the Company, the Committee may, in its discretion, substitute securities of another issuer for any Shares
subject to outstanding Awards.
4.4 Limit on
Non-Employee
Director Awards.
Effective beginning with calendar year
2017, the maximum number of Shares subject to those Awards that are granted under the Plan during any one calendar year to an individual who, on the grant date of the award, is a
Non-Employee
Director is the
number of Shares that produce a grant date fair value for the Award that, when combined with the grant date fair value of any other Awards granted under the Plan during that same calendar year to that individual in his or her capacity as a
Non-Employee
Director, is $600,000. For purposes of this Section 4.4, grant date fair value means the value of the Award as of the date of grant of the Award and as determined using the equity award
valuation principles applied in the Companys financial reporting. The limits of this Section 4.4 do not apply to, and shall be determined without taking into account, any Award granted to an individual who, on the date of grant of the
Award, is an officer or employee of the Company or one of its Subsidiaries. The limits of this Section 4.4 apply on an individual basis and not on an aggregate basis to all
Non-Employee
Directors as a
group.
Article 5. Eligibility and Participation
5.1 Eligibility.
All Employees and
Non-Employee
Directors are eligible to participate in the Plan.
5.2 Actual Participation.
Subject to the provisions of the Plan, the Committee may, from time to time, select from all Employees those to whom Awards shall
be granted and shall determine the nature and size of each Award.
Article 6. Stock Options
6.1 Grant of Options.
Subject to the terms of the Plan, Options may be granted to Participants in such number, and upon such terms, and at any time and from time
to time as shall be determined by the Committee.
6.2 Option Price.
The Option Price under each Option will not be less than one hundred percent (100%)
of the Fair Market Value of a Share on the date the Option is granted. Except for an adjustment pursuant to Section 4.3, the Committee may not (1) amend an outstanding Option to reduce its Option Price, (2) cancel, exchange,
or surrender an outstanding Option in exchange for cash or other awards (including, without limitation, any cash
buy-out
of an underwater Option) for the purpose of repricing the award, or (3) cancel,
exchange, or surrender an outstanding Option in exchange for an Option or SAR with an Option Price or grant price that is less than the Option Price of the original award.
6.3 Term of Options.
Each Option granted to a Participant shall expire at such time as the Committee shall determine at the time of grant; provided that no
Option shall be exercisable after the tenth (10th) anniversary of its date of grant.
6.4 Exercise of Options.
Options granted under this
Article 6 shall be exercisable at such times and be subject to such restrictions and conditions (if any) as the Committee shall in each instance approve, which need not be the same for each grant or for each Participant. Options shall be
exercised by the delivery of a written notice of exercise to the Company (or completion of such electronic exercise procedures as the Committee may prescribe), setting forth the number of Shares with respect to which the Option is to be exercised,
accompanied by full payment for the Shares.
6.5 Payment.
When an Option is exercised, the Option Price shall be payable to the Company in full either:
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In cash or its equivalent; or
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By tendering previously acquired Shares having an aggregate Fair Market Value at the time of exercise equal to the total Option Price (provided that, unless otherwise provided by the Committee, the Shares that are
tendered must have been held by the Participant for at least six (6) months prior to their tender to satisfy the Option Price); or
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(c)
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By a combination of (a) and (b).
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The Committee also may allow broker-assisted exercise as permitted under Federal
Reserve Boards Regulation T, subject to applicable securities law restrictions, or by the withholding of Shares otherwise deliverable upon exercise of an Option, or by any other means that the Committee determines to be consistent with
the Plans purpose and applicable law.
Subject to any governing rules or regulations, as soon as practicable after receipt of a notification of exercise and
full payment of the Option Price, the Company shall deliver to the Participant, in the Participants name (or, at the direction of the Participant, jointly in the names of the Participant and the Participants spouse), the Shares
purchased under the Option(s).
6.6 Limitations on ISOs.
Notwithstanding anything in the Plan to the contrary, to the extent required from time to time by
the Code and/or applicable regulations, the following additional provisions shall apply to the grant of Options that are intended to qualify as ISOs:
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Fair Market Value Limitation.
The aggregate Fair Market Value (determined as of the date the ISO is granted) of the Shares with respect to which ISOs are exercisable for the first time by any Participant during
any calendar year under all plans of the Company (or any parent or subsidiary corporation within the meaning of Code Section 424) shall not exceed one hundred thousand dollars ($100,000) or such other amount as may subsequently be specified by
the Code and/or applicable regulations; provided that, to the extent that such limitation is exceeded, any Options on Shares with a Fair Market Value in excess of such amount shall be deemed to be NQSOs.
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(b)
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Code Section
422.
ISOs may only be granted to employees of the Company (or any parent or subsidiary corporation within the meaning of Code Section 424). ISOs shall contain such other
provisions as the Committee shall deem advisable, but shall in all events be consistent with and contain or be deemed to contain all provisions required in order to qualify as ISOs. Moreover, all ISOs must be granted within ten (10) years from
the Effective Date. If an otherwise-intended ISO fails to meet the applicable requirements of Section 422 of the Code, the Option shall be a NQSO.
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Article 7. Restricted Stock and Restricted Stock Units
7.1 Grant of Restricted Stock.
Subject to the terms and provisions of the Plan, the Committee, at any time and from time to time, may grant Shares of Restricted
Stock to Participants in such amounts and upon such terms as the Committee shall determine.
7.2 Restrictions.
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(a)
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Subject to Article 11 hereof, the Committee shall impose such conditions and/or restrictions on any Shares of Restricted Stock as the Committee may determine including, without limitation, a requirement that
Participants pay a stipulated purchase price for each Share of Restricted Stock, restrictions based upon the achievement of specific performance goals (Company-wide, divisional, and/or individual), time-based restrictions on vesting following the
attainment of the performance goals, and/or restrictions under applicable federal or state securities laws.
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(b)
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The Company may retain the certificates representing Shares of Restricted Stock in the Companys possession, or provide for appropriate notations as to any applicable conditions and/or restrictions on any such
Shares recorded in book entry form, until such time as all conditions and/or restrictions applicable to such Shares have been satisfied.
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Except as otherwise provided in this Article 7, Shares of Restricted Stock that have not yet been forfeited or canceled shall become freely transferable (subject to any restrictions under applicable securities laws) by
the Participant after the last day of the applicable Restriction Period.
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7.3 Voting Rights.
Participants holding Shares of Restricted Stock
may be granted full voting rights with respect to those Shares during the Restriction Period.
7.4 Dividends and Other Distributions.
During the Restriction
Period, Participants holding Shares of Restricted Stock may be credited with regular cash dividends paid with respect to such Shares while they are so held. Subject to Section 9.2, the Committee may apply any restrictions to the dividends that
the Committee deems appropriate.
7.5 Restricted Stock Units.
In lieu of or in addition to any Awards of Restricted Stock, the Committee may grant Restricted
Stock Units to any Participant, subject to the terms and conditions of this Article 7 being applied to such Awards as if those Awards were for Restricted Stock and subject to such other terms and conditions as the Committee may determine. Each
Restricted Stock Unit shall have an initial value that is at least equal to the Fair Market Value of a Share on the date of grant. Restricted Stock Units may be paid at such time as the Committee may determine in its discretion, and payments
may be made in a lump sum or in installments, in cash, Shares, or a combination thereof, as determined by the Committee in its discretion.
Article 8. Performance Units and Performance Shares
8.1 Grant of Performance Units/Shares.
Subject to the terms of the Plan, Performance Units, and/or Performance Shares may be granted to Participants in such
amounts and upon such terms, and at any time and from time to time, as shall be determined by the Committee.
8.2 Value of Performance Units/Shares.
Each Performance Unit shall have an initial value that will not be less than the Fair Market Value of a Share on the date of grant. Each Performance Share shall have an initial value equal to the Fair Market Value of a Share on the date of
grant. The Committee shall set performance goals in its discretion that, depending on the extent to which they are met, shall determine the number and/or value of Performance Units/Shares that shall be paid out to the Participant.
8.3 Earning of Performance Units/Shares.
Subject to the terms of the Plan, after the applicable Performance Period has ended, the holder of Performance
Units/Shares shall be entitled to receive payout with respect to the number and value of Performance Units/Shares earned by the Participant over the Performance Period, to be determined as a function of the extent to which the corresponding
performance goals have been achieved.
8.4 Form and Timing of Payment of Performance Units/Shares.
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(a)
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Unless the Committee determines otherwise in its discretion, payment of earned Performance Units/Shares shall be made in a single lump sum following the close of the applicable Performance Period and no later than
2-1/2
months after the calendar year following the calendar year in which the Performance Period ends. Subject to the terms of the Plan, the Committee, in its discretion, may direct that earned Performance
Units/Shares be paid in the form of cash or Shares (or in a combination thereof) that have an aggregate Fair Market Value equal to the value of the earned Performance Units/Shares on the last trading day immediately before the close of the
applicable Performance Period. or on the last trading day immediately before the payment of such awards, as determined by the Committee and provided in the applicable Award Agreement. Such Shares may be granted subject to any restrictions deemed
appropriate by the Committee.
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(b)
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Participants may, at the discretion of the Committee, be entitled to exercise voting rights with respect to such Shares.
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Article 9. Other Awards
9.1 In General.
Subject to the terms of the Plan, the Committee may grant any types of Awards other than those that are specifically set forth in Articles 6
through 8 hereof, including, but not limited to, SARs, the payment of Shares in lieu of cash under any Company incentive bonus plan or program, or Share bonuses. Subject to the terms of the Plan, including the remaining provisions of this
Article 9, the Committee, in its sole discretion, shall determine the terms and conditions of such Other Awards. Other Awards may include Restricted Stock Units that are fully vested at grant.
9.2 Dividend and Dividend Equivalent Rights.
Dividend equivalent rights may be granted as a separate Award or in connection with another Award under this Plan;
provided, however, that dividend equivalent rights may not be granted as to an Option or SAR granted under the Plan. Any dividends and/or dividend equivalents as to an Award (other than an Option or SAR) that is subject to vesting conditions will
only vest and be paid to the same extent that the related vesting conditions of the Award are satisfied (or, in the case of Restricted Stock or other Award where the dividend must be paid on outstanding Shares as a matter of law, the Award will
provide for the forfeiture or repayment of any dividends on the Shares subject to the Award to the extent the Award does not vest).
9.3 Grant of SARs.
Subject to the terms and conditions of the Plan, SARs may be granted to Participants at any time and from time to time as shall be determined by the Committee. The Committee may grant Freestanding SARs, Tandem SARs, or any combination of
these forms of SAR. Except for an adjustment pursuant to Section 4.3, the Committee may not (1) amend an outstanding SAR to reduce the grant price of the SAR, (2) cancel, exchange, or surrender an outstanding SAR in exchange for cash
or other awards (including, without limitation, any cash
buy-out
of an underwater SAR) for the purpose of repricing the award, or (3) cancel, exchange, or surrender an outstanding SAR in exchange for an
Option or SAR with an Option Price or grant price that is less than the grant price of the original award.
The Committee shall have complete discretion in
determining the number of SARs granted to each Participant (subject to Article 4 hereof) and, consistent with the provisions of the Plan, in determining the terms and conditions pertaining to such SARs.
The grant price of a Freestanding SAR shall be equal to no less than one hundred percent (100%) of the Fair Market Value of a Share on the date of grant of the
SAR. The grant price of Tandem SARs shall equal the Option Price of the related Option.
9.4 Exercise of Tandem SARs.
Tandem SARs may be exercised for all or
part of the Shares subject to the related Option upon the surrender of the right to exercise the equivalent portion of the related Option. A Tandem SAR may be exercised only with respect to the Shares for which its related Option is then
exercisable.
Notwithstanding any other provision of the Plan to the contrary, with respect to a Tandem SAR granted in connection with an ISO: (a) the Tandem
SAR shall expire no later than the expiration of the ISO; (b) the value of the payout with respect to the Tandem SAR shall not exceed the excess of the Fair Market Value of the Shares subject to the ISO at the time the Tandem SAR is exercised
over the Option Price under the ISO; and (c) the Tandem SAR may be exercised only when the Fair Market Value of the Shares subject to the ISO exceeds the Option Price of the ISO.
9.5 Exercise of Freestanding SARs.
Freestanding SARs may be exercised upon whatever terms and conditions the Committee, in its discretion, imposes upon them,
subject, however, to the terms of the Plan.
9.6 Term of SARs.
The term of an SAR shall be determined by the Committee, in its discretion; provided that such
term shall not exceed ten (10) years.
9.7 Payment of SAR Amount.
Upon exercise of an SAR, a Participant shall be entitled to receive payment from the
Company in an amount determined by multiplying:
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The excess of the Fair Market Value of a Share on the date of exercise over the grant price, by
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(b)
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The number of Shares with respect to which the SAR is exercised.
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At the discretion of the Committee, the payment upon
SAR exercise may be in cash, in Shares of equivalent Fair Market Value, or in some combination thereof.
Article 10. Award Agreements
10.1 In General.
Each Award shall be evidenced by an Award Agreement that shall include such provisions as the Committee shall determine and that
shall specify:
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(a)
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In the case of an Option, the number of the Shares to which the Option pertains, the Option Price, the term of the Option, the schedule on which the Option becomes exercisable, and whether the Option is intended to be
an ISO or an NQSO;
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(b)
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In the case of Restricted Stock or Restricted Stock Units, the number of Shares of Restricted Stock or Restricted Stock Units granted, the applicable restrictions, and the Restriction Period(s);
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(c)
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In the case of Performance Units or Performance Shares, the number of Performance Units or Performance Shares granted, the initial value of a Performance Unit (if applicable), and the performance goals; and
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(d)
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In the case of an SAR, the number of Shares to which the SAR pertains, the grant price, the term of the SAR, the schedule on which the SAR becomes exercisable, and whether the SAR is a Freestanding SAR or a
Tandem SAR.
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10.2 Severance from Service.
Each Award Agreement shall set forth the extent to which the Participant shall have rights, if any,
under the Award following the Participants severance from service with the Company and its Subsidiaries. The Award Agreement may make distinctions based on the reason for the Participants severance from service and may contain
obligations that apply beyond the term of the Award Agreement.
10.3 Restrictions on Transferability.
Subject to the provisions of the Plan, in the case of
an ISO (and in the case of any other Award), a Participants Award may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution, and shall be exercisable
during the Participants lifetime only by the Participant.
10.4 Uniformity Not Required.
The provisions of the Award Agreements need not be uniform
among all Awards, among all Awards of the same type, among all Awards granted to the same Participant, or among all Awards granted at the same time.
Article 11. Qualified Performance-Based Awards
Restricted Stock, Restricted Stock Units, Performance Shares and Performance
Units granted to officers and employees of the Company or any of its subsidiary corporations (within the meaning of Code Section 424) may be granted with the intent that the award satisfy the Performance-Based Exception (any such award intended
to satisfy the Performance-Based Exception, a Qualified Performance-Based Award
).
The grant, vesting, or payment of Qualified Performance-Based
Awards may depend on the degree of achievement of one or more performance goals relative to a
pre-established
targeted level or levels using one or more of the performance measures set forth below (on an
absolute or relative (including, without limitation, relative to the performance of one or more other companies or upon comparisons of any of the indicators of performance relative to one or more other companies) basis, any of which may also be
expressed as a growth or decline measure relative to an amount or performance for a prior date or period) for the Company on a consolidated basis or for one or more of the Companys subsidiaries, segments, divisions, or business or operational
units, or any combination of the foregoing.
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The performance measure(s) to be used for purposes of such Qualified Performance-Based Awards shall be chosen from
among:
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Income measures (including, but not limited to, gross profit, operating income, earnings before or after taxes, or earnings per share);
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(b)
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Return measures (including, but not limited to, return on assets, investment, equity, or sales);
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(c)
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Cash flow measures (including, but not limited to, free cash flow);
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Economic value added; and
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(g)
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Share price (including, but not limited to, total shareholder return).
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The Performance Period applicable to any
Qualified Performance-Based Award may not be less than three (3) months nor more than ten (10) years. To satisfy the Performance-Based Exception, the performance measure(s) applicable to the Qualified Performance-Based Award and specific
performance formula, goal or goals (targets) must be established and approved by the Committee during the first ninety (90) days of the applicable Performance Period (and, in the case of Performance Periods of less than one year, in
no event after 25% or more of the Performance Period has elapsed) and while performance relating to such target(s) remains substantially uncertain within the meaning of Section 162(m) of the Code.
The terms of a Qualified Performance-Based Award may specify the manner, if any, in which performance targets (or the applicable measure of performance) shall be
adjusted: to mitigate the unbudgeted impact of material, unusual or nonrecurring gains and losses; to exclude restructuring and/or other nonrecurring charges; to exclude the effects of financing activities; to exclude exchange rate effects; to
exclude the effects of changes to accounting principles; to exclude the effects of any statutory adjustments to corporate tax rates; to exclude the effects of any items of an unusual nature or of infrequency of occurrence; to exclude the effects of
acquisitions or joint ventures; to exclude the effects of discontinued operations; to assume that any business divested achieved performance objectives at targeted levels during the balance of a performance period following such divestiture or to
exclude the effects of any divestiture; to exclude the effect of any event or transaction referenced in Section 4.3; to exclude the effects of stock-based compensation; to exclude the award of bonuses; to exclude amortization of acquired
intangible assets; to exclude the goodwill and intangible asset impairment charges; to exclude the effect of any other unusual,
non-recurring
gain or loss,
non-operating
item or other extraordinary item; to exclude the costs associated with any of the foregoing or any potential transaction that if consummated would constitute any of the foregoing; or to exclude other items specified by the Committee at the time of
establishing the targets.
The Committee will have the discretion to determine the restrictions or other limitations of the individual Qualified Performance-Based
Awards including the authority to reduce awards, payouts or vesting or to pay no awards, in its sole discretion, if the Administrator preserves such authority at the time of grant by language to this effect in its authorizing resolutions or
otherwise.
Before any Qualified Performance-Based Award is paid and to the extent applicable to satisfy the Performance-Based Exception, no payment under such
Award shall be made prior to the time that the Committee certifies in writing that the performance measure has been achieved. For this purpose, a resolution adopted at the Committee meeting at which the certification is made shall be treated as a
written certification. No such certification is required, however, in the case of an Award that is based solely on an increase in the value of a Share from the date such Award was made.
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Verizon
2017 Proxy Statement
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Appendices
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Appendix B
As required pursuant to Section 162(m) of the Code and the regulations promulgated thereunder, the Committees
authority to grant new Qualified Performance-Based Awards shall terminate upon the first meeting of the Companys shareholders that occurs in the fifth year following the year in which the Effective Date occurs, subject to any subsequent
extension that may be approved by the Companys shareholders.
Options and SARs granted to any such officer or employee of the Company or any subsidiary
corporation (within the meaning of Code Section 424) may also be intended to satisfy the Performance-Based Exception, but any such Option or SAR need not satisfy the other requirements set forth above as to Qualified Performance-Based Awards.
Awards not satisfying Section 162(m) of the Code are not subject to the requirements of this Article 11. Nothing in the Plan requires the Committee to qualify any Award or compensation as performance-based compensation under Section
162(m) of the Code.
Article 12. Beneficiary Designation
Each Participant may, from time to time, name any beneficiary or beneficiaries (who may be named contingently or successively) to whom any benefit under the Plan is to
be paid in case of the Participants death before the Participant receives any or all of such benefit. Each such designation shall revoke all prior designations by the same Participant with respect to such benefit, shall be in a form prescribed
by the Company, and shall be effective only when filed by the Participant in writing with the Company during the Participants lifetime. In the absence of any such designation, any benefits remaining unpaid under the Plan at the
Participants death shall be paid to the Participants estate unless otherwise provided in the Award Agreement.
Article 13.
Deferrals
The Committee may permit or require a Participant to defer receipt of the payment of cash or the delivery of Shares that would otherwise be
due pursuant to the lapse or waiver of restrictions with respect to Restricted Stock or Restricted Stock Units, the satisfaction of any requirements or goals with respect to Performance Units/Shares, or in connection with any Other Awards. If any
such deferral is required or permitted, the Committee shall establish rules and procedures for such deferrals that are intended to be in compliance with the requirements of Section 409A of the Code.
Article 14. No Right to Employment or Participation
14.1 Employment.
The Plan shall not interfere with or limit in any way the right of the Company or of any Subsidiary to terminate any Employees employment
at any time, and the Plan shall not confer upon any Employee the right to continue in the employ of the Company or of any Subsidiary.
14.2 Participation.
No
Employee or
Non-Employee
Director shall have the right to be selected to receive an Award or, having been so selected, to be selected to receive a future Award.
Article 15. Change in Control
No
outstanding Awards that have been granted under this Plan shall vest or become immediately payable or exercisable merely upon the occurrence of a Change in Control. However, if within twelve (12) months following the occurrence of a Change in
Control, a Participant is involuntarily terminated without Cause or is deemed to have separated from service as the result of a Good Reason, then all outstanding Options and SARs shall become immediately exercisable, and any
restriction periods and other restrictions imposed on then-outstanding Awards shall lapse and will be paid at their targeted award level. Notwithstanding the foregoing, such Awards shall not become payable until their regularly scheduled time as
specified under the terms and conditions of the applicable Award Agreement, except that, to the extent an Award is exempt from Section 409A of the Code under the short-term deferral rule, payment shall not be later than
2-1/2
months after the year in which it is no longer subject to a substantial risk of forfeiture. Both Cause and Good Reason shall be as defined in the applicable Award Agreement. While no
outstanding Award that has been granted
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Verizon
2017 Proxy
Statement
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B-13
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Appendices
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Appendix B
under this Plan may vest or become immediately payable or exercisable merely upon the occurrence of a Change in Control, the Committee may override the other provisions of this Article 15 as
to an Award, or provide other Change in Control provisions as to the Award (including, without limitation, providing for the treatment of any performance-based conditions in connection with the Change in Control), in the applicable Award Agreement.
Article 16. Amendment, Modification, and Termination
16.1 Amendment, Modification, and Termination.
Subject to the terms of the Plan, the Committee may at any time and from time to time, alter, amend, suspend, or
terminate the Plan in whole or in part; provided that unless the Committee specifically provides otherwise, any revision or amendment that would cause the Plan to fail to comply with any requirement of applicable law if such amendment were not
approved by the shareholders of the Company shall not be effective unless and until shareholder approval is obtained.
16.2 Awards Previously Granted.
After
the termination of the Plan, any previously granted Award shall remain in effect and shall continue to be governed by the terms of the Plan, the Award, and any applicable Award Agreement.
Article 17. Withholding
17.1 Tax
Withholding.
The Company and its Subsidiaries shall have the power and the right to deduct or withhold, or to require a Participant to remit to the Company or to a Subsidiary, an amount that the Company or a Subsidiary reasonably determines to
be required to comply with federal, state, local, or foreign tax withholding requirements.
17.2 Share Withholding.
With respect to withholding required
upon the exercise of Options or SARs, upon the lapse of restrictions on Restricted Stock, or upon any other taxable event arising as a result of Awards granted hereunder, the Committee may require or Participants may elect, subject to the approval
of the Committee, to satisfy the withholding requirement, in whole or in part, by having the Company withhold Shares having a Fair Market Value on the date the tax is to be determined equal to the statutory withholding tax that could be imposed on
the transaction. All such elections shall be irrevocable, made in writing, signed by the Participant, and shall be subject to any restrictions or limitations that the Committee, in its discretion, deems appropriate.
Article 18. Stock-Based Awards in Substitution for Awards Granted by Other Corporation
Awards may be granted to Employees in substitution for or in connection with an assumption of stock options, stock appreciation rights, restricted stock, restricted
stock units, performance shares, performance units or other stock-based awards granted by other entities to persons who are or who will become Employees in connection with a distribution, merger or other reorganization by or with the granting entity
or an affiliated entity, or the acquisition by the Company or one of its Subsidiaries, directly or indirectly, of all or a substantial part of the stock or assets of the employing entity. The awards so granted need not comply with other specific
terms of the Plan, provided the awards reflect adjustments giving effect to the assumption or substitution consistent with any conversion applicable to the common stock (or the securities otherwise subject to the award) in the transaction and any
change in the issuer of the security. Any shares that are delivered and any awards that are granted by, or become obligations of, the Company, as a result of the assumption by the Company of, or in substitution for, outstanding awards previously
granted or assumed by an acquired company (or previously granted or assumed by a predecessor employer (or direct or indirect parent thereof) in the case of persons that become Employees in connection with a business or asset acquisition or similar
transaction) shall not be counted against the share limit of Section 4.1 or other limits on the number of shares available for issuance under the Plan.
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B-14
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Verizon
2017 Proxy Statement
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Appendices
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Appendix B
Article 19. Clawback Policy and Other Policies
The Awards granted under the Plan are subject to the terms of the Companys recoupment, clawback or similar policy as it may be in effect from time to time, as
well as any similar provisions of applicable law, as well as any other policy of the Company that applies to Awards, such as anti-hedging or pledging policies, as they may be in effect from time to time.
Article 20. Successors
All obligations of
the Company under the Plan with respect to Awards granted hereunder shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or
otherwise, of all or substantially all of the business and/or assets of the Company.
Article 21. Legal Construction
21.1 Gender and Number; Captions.
Except where otherwise indicated by the context, any masculine term used herein also shall include the
feminine; any feminine term used herein also shall include the masculine; and the plural shall include the singular and the singular shall include the plural. Captions and headings are given to the articles, sections and subsections of the Plan
solely as a convenience to facilitate reference. Such headings shall not be deemed in any way material or relevant to the construction or interpretation of the Plan or any provision thereof.
21.2 Severability.
If any provision of the Plan shall be held illegal or invalid for any reason, such illegality or invalidity shall not affect the remaining
parts of the Plan, and the Plan shall be construed and enforced as if the illegal or invalid provision had not been included.
21.3 Requirements of Law.
The
granting of Awards and the issuance of Shares under the Plan shall be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required. In addition, the
Plan and all Awards will be interpreted and construed to avoid any tax, penalty or interest under Code Section 409A. The Committee, in its reasonable discretion, may amend the Plan (including retroactively) in any manner to conform with
Section 409A of the Code. Except for the Companys obligations to withhold taxes, the Company will have no obligation relating to any tax or penalty applicable to any person as a result of participation in the Plan.
21.4
Non-Exclusivity
of Plan.
Nothing in the Plan shall limit or be deemed to limit the authority of the Board or the
Committee to grant awards or authorize any other compensation, with or without reference to the Shares, under any other plan or authority.
21.5 Governing Law.
The Plan shall be construed in accordance with and governed by the laws of the State of Delaware (without regard to the legislative or judicial conflict of laws rules of any state), except to the extent superseded by federal law.
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Verizon
2017 Proxy
Statement
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Sustainability at Verizon
Verizon received an A- on the Carbon Disclosure Projects
2016 evaluation and is now ranked in CDPs Leadership scoring band. CDP runs a global voluntary disclosure system by which companies and cities disclose their environmental impacts to inform marketplace decision-making.
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Verizon is committed to creating shareholder and community value while operating in a responsible way.
We are growing our business by creating solutions that deliver environmental and societal benefits
to our customers. We are also focused on managing risks associated with technology use through ongoing environmental stewardship, stakeholder engagement and participation in organizations that promote safe, secure and responsible digital
citizenship. Through our corporate philanthropy and employee giving, we also support programs that strive to help the most vulnerable in society. Our philanthropic mission is to provide technology and tech education to inspire and prepare more young
people to become the creators of tomorrow.
The UN Sustainable Development Goals (SDGs) provide
a roadmap for how our products and services deliver the promise of the digital world.
Creating opportunities
Applying IoT solutions to societal challenges
Verizons Internet of Things solutions represent a significant portion of our growth strategy and create opportunities for us to deliver on SDGs related to the
environment, cities, infrastructure, employment and education.
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Verizon is an active member of the Global
e-Sustainability
Initiative, a consortium of ICT companies that collaborate to develop and share resources for achieving social and environmental sustainability through technology.
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Mitigating risks
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Reducing carbon intensity
In
2009, we pledged to reduce our carbon intensity the carbon our business emits divided by the terabytes of data we transport over our networks by 50% by 2020, even as we grew our business.
Verizon carbon intensity
20092016
We achieved this goal in 2016. To build on our progress, we have
established a new goal to implement an additional 24MW of green energy by 2025, doubling our current green energy capacity.
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Increasing energy efficiency
Verizon was named an EPA ENERGY STAR
®
Partner of the Year for Sustained Excellence for the fourth consecutive
year in 2016. We are also well on our way to ENERGY STAR certifying 100% of our eligible buildings.
Reducing waste and supporting recycling
We
continue to work to reduce the environmental impact of our products through:
managing the materials we use
in making them,
reducing packaging volume,
recycling, refurbishing and/or reusing our products, including batteries,
providing recycling information on product labels, and supporting public recycling.
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Verizons diversity and inclusion initiatives are consistently recognized as best in class by the experts
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Working Mother
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Black Enterprise
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100 Best Companies to Work For
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40 Best Companies for Diversity
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Military Times
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Human Rights Campaign
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Best for Vets: Employers
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Corporate Equality Index Rating of 100%
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#1 Ranked Company
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Best Places to Work for LGBT Equality
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002CSN79EF
verizon
IMPORTANT ANNUAL MEETING INFORMATION
000004
ENDORSEMENT_LINE______________ SACKPACK_____________
MR A SAMPLE
DESIGNATION (IF ANY)
ADD 1
ADD 2
ADD 3
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ADD 5
ADD 6
Admission Ticket
C123456789
000000000.000000 ext 000000000.000000 ext
000000000.000000 ext 000000000.000000 ext
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Electronic Voting Instructions
Available 24 hours a day, 7 days a week!
Instead of mailing your proxy, you may choose one of the voting
methods
outlined below to vote your proxy.
VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE BAR.
Vote online
Go to www.envisionreports.com/vz
Or scan the QR code with your smartphone
Follow the steps outlined on the secure
website
Vote by telephone
Call toll free
1-800-652-VOTE
(8683) within the USA, US territories &
Canada on a touch tone telephone
Follow the instructions provided by the recorded
message
Using a black ink pen, mark your votes with an X as shown in X
this
example. Please do not write outside the designated areas.
Annual Meeting Proxy Card 1234 5678 9012 345
IF YOU ARE VOTING BY MAIL, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.
A The Board of Directors recommends a vote FOR all nominees, FOR Proposals 2, 3 and 5, and FOR 1 Year for Proposal 4.
1. Election of Directors:
For
Against Abstain
For
Against
Abstain
For
Against
Abstain
For
Against
Abstain
+
01 - Shellye L.
02 - Mark T.
03 - Richard L.
04 - Melanie L.
Archambeau
Bertolini
Carrión
Healey
05 - M. Frances
06 - Karl-Ludwig
07 - Lowell C.
08 - Clarence
Keeth
Kley
McAdam
Otis, Jr.
09 - Rodney E.
10 - Kathryn A.
11 - Gregory D.
12 - Gregory G.
Slater
Tesija
Wasson
Weaver
For
Against
Abstain
For
Against
Abstain
2. Ratification of Appointment of Independent Registered Public Accounting Firm
3. Advisory Vote to Approve Executive Compensation
1 Year
2 Years
3 Years
Abstain
4. Advisory Vote Related to Future Votes on Executive Compensation
5. Approval of 2017 Long-Term Incentive Plan
B The Board of Directors recommends a vote
AGAINST:
For
Against
Abstain
For
Against
Abstain
For
Against
Abstain
6. Human Rights
7. Report on Greenhouse Gas
Committee
Reduction Targets
8. Special Shareowner Meetings
9. Executive Compensation
11. Limit Matching Contributions
10. Stock Retention Policy
Clawback Policy
for Executives
C Authorized Signatures This section must be completed for your vote to
be counted. Date and Sign Below
Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor,
administrator, corporate officer, trustee, guardian, or custodian, please give full title.
Date (mm/dd/yyyy) Please print date below.
Signature 1 Please keep signature within the box.
Signature 2 Please keep
signature within the box.
C1234567890
J N T
MR A SAMPLE (THIS AREA IS SET UP TO ACCOMMODATE
140 CHARACTERS) MR A SAMPLE AND MR A SAMPLE
AND
MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND
1PCF
3161231
MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND
+
02IHSE
Verizon Communications Inc.
2017 Annual Meeting
Admission Ticket
May 4, 2017, 8:30 a.m. Local Time
Dallas Marriott Las
Colinas
223 West Las Colinas Boulevard
Irving, Texas 75039
Upon arrival, please present this admission ticket at the registration desk.
IF YOU ARE VOTING
BY MAIL, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.
Notice of 2017 Annual Meeting of Shareholders
Proxy Solicited by the Board of Directors of Verizon Communications Inc. for the Annual Meeting of Shareholders,
Thursday, May 4, 2017, 8:30 a.m. Local Time
Your signature on the reverse side of this
card appoints each of Lowell C. McAdam and William L. Horton, Jr. as proxies, with the powers you would have if you were personally present at the meeting. This includes full power of substitution to vote all the shares of Verizon common stock that
you hold of record upon all subjects that may properly come before the meeting, including the matters described in the Proxy Statement, subject to any directions indicated on the reverse side of this card. If you do not indicate how your shares are
to be voted, at the meeting or any adjournment or postponement of the meeting the proxies will vote for the election of the nominees for Director listed on the reverse side of this card; and in accordance with the Directors recommendations on
the other matters listed on the reverse side of this card; and at their discretion on any other matter that may properly come before the meeting or any adjournment or postponement of the meeting.
This card also provides your instructions for voting any shares that you may hold in the Verizon Communications Direct Invest Plan. Also, if you own shares in any current or former
Verizon savings plan in the same name as shown on this card, this card provides instructions to the savings plan trustee for voting those shares. To allow sufficient time for the savings plan trustee to tabulate the vote of the savings plan shares,
you must vote by telephone or online or return this card in the enclosed envelope so that your vote is received by May 1, 2017.
If you do not properly sign
and return this card, vote by telephone or online or attend the meeting and vote by ballot, your shares cannot be voted. Unless the savings plan trustee receives your voting instructions by May 1, 2017 your shares in any of the current or
former Verizon employee savings plans will be voted as described in the Proxy Statement.
If you are voting by mail, please sign and return this card in the
enclosed envelope. Please sign exactly as the name(s) appears on this card. If stock is held jointly, each holder should sign. If you are signing as an attorney, trustee, executor, administrator, custodian, guardian or corporate officer, please give
your full title. If you vote by telephone or online, please do not mail your card.
Your email address can help save the environment. Vote online and register for
electronic communications today.
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