| 
| | | The Board of Directors oversees the development and implementation of the compensation program for Verizon’s named executive officers.recommends that you voteFOR this proposal. For 2017, our named executive officers were:
| | | | | | | | 
| | Lowell C. McAdam
Chairman and
Chief Executive Officer
| | 
| | Matthew D. Ellis
Executive Vice President and
Chief Financial Officer
| | | | | | | | 
| | John G. Stratton
Executive Vice President and
President – Global Operations
| | 
| | Hans E. Vestberg*
Executive Vice President,
President – Global Networks
and Chief Technology Officer
| | | | | | | | 
| | Marni M. Walden**
Executive Vice President and
President – Global Media
| | | | |
* | Mr. Vestberg was hired as Verizon’s Executive Vice President, President – Global Networks and Chief Technology Officer effective April 3, 2017. |
22Verizon 2020 Proxy Statement
** | Ms. Walden served as Executive Vice President and President – Global Media until December 31, 2017. Ms. Walden left Verizon on February 28, 2018. |
| | | 26 | | |Verizon 2018 Proxy Statement |
Compensation Discussion and Analysis | Best practices in executive compensation and governance
Best practices in executive compensation and governanceCompensation Discussion and Analysis The Human Resources Committee of the Board of Directors oversees the development and implementation of the compensation program for Verizon’s named executive officers. 
Shareholder Feedback on Compensation Our Board, the Human Resources Committee and our management team value shareholder perspectives on our executive compensation program. Management and Directors engage with our institutional shareholders in meetings and calls throughout the year. Topics of discussion typically include the Committee’s choice of performance measures for awards issued under our Short- and Long-Term Incentive Plans, the relationship between the performance measures and our long-term strategy, the payout terms of equity awards, compensation recoupment policies and shareholder proposals. In addition to this direct feedback, as part of the Committee’s annual review of the executive compensation program, the Committee considers the outcome of Verizon’s annual shareholder advisory vote on executive compensation – the“say-on-pay.” At our Annual Meeting in May 2019, the compensation of our named executive officers was approved by approximately 90% of votes cast. Based on the perspective obtained from discussions with our long-term shareholders, the results of our 2019say-on-pay vote, and the history of strong shareholder support in priorsay-on-pay votes, the Committee believes our shareholders continue to strongly support Verizon’s executive compensation program. Verizon 2020 Proxy Statement 23
Compensation Discussion and Analysis Best Practices in Executive Compensation and Governance Best Practices in Executive Compensation and Governance Our compensation program reflects our commitment to industry-leading standards for compensation design and governance. The Human Resources 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 executive compensation program that demonstrate the rigor of our policies. | | | | |  What We Do | | | | More Information on Page | | | | Pay for performance | | Approximately 90% of named executive officers’ total compensation opportunity is variable, incentive-based pay. | | 26 | | | | Robust stock ownership guidelines | | 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. | | 36 | | | | Shareholder outreach | | 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 Committee. | | 23 | | | | Clawback policies | | Our clawback policies give us the right to cancel or “claw back” incentive compensation from any senior executive who has engaged in misconduct that results in (i) significant reputational or financial harm to Verizon or (ii) a material financial restatement. | | 37 | | | | Anti-hedging policy | | Our anti-hedging policy prohibits Directors and 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. | | 37 | | | | Annual compensation risk assessment | | We perform a risk assessment of our compensation program that demonstrate the rigor of our policies.every year. | 17 | | | | | | | | | | Independent compensation consultant | | The Committee’s independent compensation consultant cannot do any work for the Company while it is engaged by the Committee. | | 25 | | | | Double-trigger change in control | | In the event of a change in control, our Long-Term Incentive Plan (Long-Term Plan) requires an involuntary termination for any accelerated vesting of awards. | | 36 | Compensation practice | | | | Verizon policy | | More information on page | | Pay for performance
| | 
|
 What We Don’t Do | | | | | Approximately 90% of named executive officers’ total compensation opportunity is variable, incentive-based pay.
| | | 32
| | Robust stock ownership guidelines
| |
| | 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.
| | | 43
| | Shareholder outreach
| |
| | 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 Committee.
| | | 29
| | Clawback policy
| |
| | 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.
| | | 43
| | Anti-hedging policy
| |
| | Our anti-hedging policy prohibits Directors and 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.
| | | 43
| | Single peer group for benchmarking compensation and measuring long-term performance
| |
| | 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.
| | | 29
| | Annual compensation risk assessment
| |
| | We perform a risk assessment of our compensation program every year.
| | | 18
| | Independent
compensation
consultant
| |
| | 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.
| | | 28
| | Double-trigger change in control
| |
| | In the event of a change in control, our Long-Term Incentive Plan requires an involuntary termination for accelerated vesting of awards.
| | | 43
| | Annual shareholder
say-on-pay
| |
| | We value our shareholders’ input on our executive compensation program, so our Board seeks anon-binding advisory vote from shareholders every year to approve the executive compensation disclosed in our CD&A and compensation tables.
| | | 59
| | Taxgross-ups
| | 
| | We do not provide taxgross-ups to our executive officers.
| | | 41
| | Dividends on unearned performance awards
| |
| | We do��not pay dividends on unearned Performance Stock Units (PSUs) or
Restricted Stock Units (RSUs).
| | | 36
| | Employment contracts
| |
| | None of our named executive officers has an employment contract.
| | | 42
| | Guaranteed benefits
| |
| | Beginning in 2006, we froze our defined benefit pension and
supplemental benefits.
| | | 42
| |
| | | Verizon 2018 Proxy Statement| | | | 27 |
| Taxgross-ups | |
Compensation Discussion and Analysis We do not provide tax|gross-ups Roles and responsibilitiesto our executive officers or Directors.
| | 35 | | | | Roles and responsibilitiesDividends on unearned performance awards
Human Resources Committee
| | We do not pay dividends on unearned Performance Stock Units (PSUs) or Restricted Stock Units (RSUs). The Human Resources Committee of the Board of Directors oversees Verizon’s management succession planning and talent development, as well as the design and implementation of the compensation program for our named executive officers. The CEO’s compensation is determined by the independent members of the Board after receiving the Committee’s recommendation. References to the Committee in this Compensation Discussion and Analysis with respect to the CEO’s compensation reflect that process.
| | 31 | | | | ManagementEmployment contracts
| | 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 CEO’s views on whether the existing compensation policies and practices continue to support Verizon’s business and performance objectives, utilize appropriate performance targets, and appropriately reward the contributions of the other named executive officers. While the Committee values the CEO’s 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 firm’s independence and expertise in representing the compensation committees of large corporations. The Consultant advises the Committee on all matters related to the compensationNone of our named executive officers has an employment contract.
| | 36 | | | | Guaranteed benefits | | In 2006, we froze our defined benefit pension and ournon-employee Directors. This includessupplemental benefits. | | 35 |
Roles and Responsibilities Human Resources Committee The Human Resources Committee of the Board of Directors oversees the design and implementation of the compensation program for our named executive officers, as well as Verizon’s management succession planning and talent development. The CEO’s compensation is determined by the independent members of the Board after receiving the Committee’s recommendation. References to the Committee in this Compensation Discussion and Analysis with respect to the CEO’s compensation reflect that process. 24Verizon 2020 Proxy Statement
Compensation Discussion and Analysis Benchmarking Total Compensation Opportunity Management The Committee may consult with the Executive Vice President and Chief Human Resources 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 Human Resources Officer, who reports to the Committee on the actions taken under this delegation. The Committee seeks the CEO’s views on whether the existing compensation policies and practices continue to support Verizon’s business and performance objectives, utilize appropriate performance targets, and appropriately reward the contributions of the other named executive officers. While the Committee values the CEO’s 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 retained Semler Brossy as its compensation consultant at the end of August 2019. Prior to that, it had retained Pearl Meyer as its compensation consultant. The compensation consultant, which is referred to as the Consultant, advises the Committee on all matters related to the compensation of our named executive officers and ournon-employee Directors. The Consultant’s advisory services include providing current benchmarking data for our peer group and other relevant market data in our industry and helping the Committee interpret this data, as well as data provided 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, and neither Semler Brossy nor Pearl Meyer performed work for the Company in 2019. The Committee made assessments of its compensation consultants under SEC rules and NYSE and Nasdaq listing standards and concluded that each of Semler Brossy and Pearl Meyer was independent, and that the firms’ work in 2019 for the Committee did not raise any conflicts of interest. Benchmarking Total Compensation Opportunity The Committee evaluates whether the compensation opportunities for our executives are appropriate and competitive by comparing each named executive officer’s total compensation opportunity – which represents the sum of the executive’s base salary and target award amounts under the Short-Term Incentive Plan (Short-Term Plan) and the Long-Term Plan – to the total compensation opportunities for executives in comparable positions at peer companies. A named executive officer’s total compensation opportunity may be higher or lower depending upon the executive’s tenure and overall level of responsibility. | | | | | | | For 2019 compensation decisions, 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 incompared each named 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 Committee’s request, Pearl Meyer provided a letter addressing its independence, including the following factors:
No other services providedofficer’s total compensation opportunity to the Company by the Consultant;
Fees paid by the Committee as a percentage of the Consultant’s total revenue;
Any business or personal relationships between the individual consultants involvedcompensation opportunities for executives in the engagement and a member of the Committee;
Policies or procedures maintained by the Consultant that are designed to prevent a conflict of interest;
Any Company stock owned by the individual consultants involvedcomparable positions at companies in the engagement; and
Any business or personal relationships between our executive officers and the Consultant or the individual consultants involved in the engagement.
The Committee has concluded that no conflict of interest exists that would prevent Pearl Meyer from serving as an independent consultant to the Committee.
| | | 28 | | |Verizon 2018 Proxy Statement |
Compensation Discussion and Analysis | 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 Committee’s annual review of the program, it considers the outcome of Verizon’s annual shareholder advisory vote on executive compensation – the“say-on-pay.” At our Annual Meeting in May 2017, the compensation of our named executive officers was approved by approximately 93% of votes cast, demonstrating a high level of shareholder support for our compensation program and policies.
Management and Directors engage with our institutional shareholders in meetings and calls throughout the year. Topics covered have included, among others, the Committee’s choice of performance measures for awards issued under our Short- and Long-Term Incentive Plans, the relationship between the performance measures and our long-term strategy, the payout terms of equity awards, compensation recoupment policies, shareholder proposals and SEC compensation disclosure initiatives. Based on the feedback we have received during our outreach meetings, the results of our 2017say-on-pay vote, and the history of strong shareholder support in priorsay-on-pay votes, the Committee believes our shareholders continue to strongly support Verizon’s executive compensation program.
Peer group
The Committee uses the same peer group to benchmark executive pay opportunities and to evaluate Verizon’s relative stock performance under the Long-Term Plan. This peer group, which we call the Related Dow Peers, includeswhich is composed of the 29 companies (other than Verizon) in the Dow Jones Industrial Average, plus Verizon’s five largest industry competitors that are not included in the Dow Jones Industrial Average. ThisAverage, referencing the 50th percentile when making this comparison. The Related Dow Peers group ofincludes our five largest industry competitors, as well as other large companies is appropriatethat we compete against in the marketplace for the dual purpose of benchmarking executive pay opportunitiestalent and evaluating relative stock performance under the Long-Term Plan becauseinvestment dollars. Although many of the companies included in the group are similar to us in market capitalization, net income, revenue and total employees, and otherwise are our five largest industry competitors. This group also includes other companies we compete against inVerizon is considerably larger than the marketplace, such as Apple, Disney and Microsoft. These companies represent Verizon’s 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 usemedian size of the Related Dow Peers providesPeers. As a consistent measureresult, the Committee considered market data from a subset of Verizon’s performance and makes it easier for shareholders to understand, evaluate and monitor Verizon’s compensation program.
| | | Verizon 2018 Proxy Statement| | | 29 |
Compensation Discussion and Analysis |Peer group
Related Dow Peer information
The following chart shows the companies included in thelarger Related Dow Peers as constituted on March 3, 2017,an additional reference point when setting compensation levels. Because the datesignificant majority of the 2017 PSU grant. The chart includes each company’s market capitalization as of December 31, 2017 as reported by Bloomberg, as well as net income attributable to the company, revenue and total number of employees as of each company’s most recent fiscalyear-end as reported in SEC filings.
| | | | | | | | | | | | | | | | | | | Company | |
| Market Capitalization
($ Millions) |
| |
| Net Income Attributable
to the Company
($ Million) |
| |
| Revenue
($ Millions) |
| | | Total Employees | | | | 3M | | | $140,188 | | | | $4,858 | | | | $31,657 | | | | 91,536 | | | Verizon’s rank among Related Dow Peers (35 companies) « 13th Market capitalization « 2nd Net income « 7th Revenue « 12th Total employees | American Express | | | $86,201 | | | | $2,736 | | | | $35,583 | | | | 55,000 | | | Apple | | | $860,882 | | | | $48,351 | | | | $229,234 | | | | 123,000 | | | AT&T | | | $238,684 | | | | $29,450 | | | | $160,546 | | | | 254,000 | | | Boeing | | | $175,642 | | | | $8,197 | | | | $93,392 | | | | 140,800 | | | Caterpillar | | | $93,750 | | | | $754 | | | | $45,462 | | | | 98,400 | | | Charter Communications | | | $93,789 | | | | $9,895 | | | | $41,581 | | | | 94,800 | | | Chevron | | | $237,783 | | | | $9,195 | | | | $127,485 | | | | 51,900 | | | Cisco Systems | | | $189,341 | | | | $9,609 | | | | $48,005 | | | | 72,900 | | | Coca-Cola | | | $195,479 | | | | $1,248 | | | | $35,410 | | | | 61,800 | | | Comcast | | | $187,185 | | | | $22,714 | | | | $84,526 | | | | 164,000 | | | DowDuPont* | | | $166,654 | | | | $2,753 | | | | $79,535 | | | | 98,000 | | | Exxon Mobil | | | $354,392 | | | | $19,710 | | | | $237,162 | | | | 69,600 | | | General Electric | | | $151,328 | | | | ($5,786 | ) | | | $120,468 | | | | 313,000 | | | Goldman Sachs Group | | | $99,816 | | | | $4,286 | | | | $42,254 | | | | 36,600 | | | Home Depot | | | $221,323 | | | | $8,630 | | | | $100,904 | | | | 400,000 | | | IBM | | | $142,035 | | | | $5,753 | | | | $79,139 | | | | 366,600 | | | Intel | | | $216,029 | | | | $9,601 | | �� | | $62,761 | | | | 102,700 | | | Johnson & Johnson | | | $375,361 | | | | $1,300 | | | | $76,450 | | | | 134,000 | | | JPMorgan Chase | | | $371,052 | | | | $24,441 | | | | $113,899 | | | | 252,539 | | | McDonald’s | | | $137,212 | | | | $5,192 | | | | $22,820 | | | | 235,000 | | | | Merck | | | $153,304 | | | | $2,394 | | | | $40,122 | | | | 69,000 | | | | Microsoft | | | $659,906 | | | | $25,489 | | | | $96,571 | | | | 124,000 | | | | Nike | | | $102,051 | | | | $4,240 | | | | $34,350 | | | | 74,400 | | | | Pfizer | | | $215,897 | | | | $21,308 | | | | $52,546 | | | | 90,200 | | | | Procter & Gamble | | | $233,096 | | | | $15,326 | | | | $65,058 | | | | 95,000 | | | | Sprint Corporation | | | $23,562 | | | | ($1,206) | | | | $33,347 | | | | 28,000 | | | | T-Mobile US | | | $52,838 | | | | $4,536 | | | | $40,604 | | | | 51,000 | | | | Travelers | | | $37,124 | | | | $2,056 | | | | $28,902 | | | | 30,800 | | | | UnitedHealth Group | | | $213,641 | | | | $10,558 | | | | $201,159 | | | | 260,000 | | | | United Technologies | | | $101,874 | | | | $4,552 | | | | $59,837 | | | | 204,700 | | | | VISA | | | $258,392 | | | | $6,699 | | | | $18,358 | | | | 15,000 | | | | Wal-Mart | | | $292,535 | | | | $9,862 | | | | $500,343 | | | | 2,300,000 | | | | Walt Disney | | | $162,374 | | | | $8,980 | | | | $55,137 | | | | 199,000 | | | | Verizon | | | $215,925 | | | | $30,101 | | | | $126,034 | | | | 155,400 | | | |
* | DowDuPont is the successor company to DuPont and Dow Chemical as a result of a merger that occurred on September 1, 2017. |
| | | 30 | | |Verizon 2018 Proxy Statement |
Compensation Discussion and Analysis |Peer group
Benchmarkingan executive’s total compensation opportunity
The Committee evaluates whetheris performance-based, the compensation opportunities for our executives are appropriate and competitive by comparing each named executive officer’s total compensation opportunity – which represents the sum of the executive’s base salary and target award amounts under the Short-Term Incentive Plan (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 50th percentile of the Related Dow Peers when making this comparison. A named executive officer’s total compensation opportunity may be higher or lower depending upon the executive’s tenure and overall level of responsibility. The total amount of compensation an executive actually receives may be less or more than the targeted opportunity based on Verizon’s annual and long-term performance results.
| | | | | | Compensation objectives and elements of compensationVerizon’s Rank
Among Related Dow Peers (35 Companies) Compensation objectives13th
Market Capitalization 5th Net Income 9th Revenue 15th Total Employees |
Verizon 2020 Proxy Statement 25
Compensation Discussion and Analysis Compensation Objectives and Elements of Compensation Appendix A to this proxy statement includes a chart that lists the companies included in the Related Dow Peers for 2019 compensation purposes, their market capitalization as of December 31, 2019, as reported by Bloomberg, and the net income attributable to the company, revenue and total number of employees, as of each company’s most recent fiscalyear-end as reported in SEC filings. The Related Dow Peers were also used to evaluate Verizon’s relative stock performance under the Long-Term Plan, as described in “Long-Term Incentive Compensation” below. The peer groups utilized for compensation benchmarking and for measuring Verizon’s relative stock performance under the Long-Term Plan are reviewed each year. Compensation Objectives and Elements of Compensation Compensation Objectives Verizon’s executive compensation program supports the creation of shareholder value by pursuing four key objectives: Attract and retain high-performing executives with the leadership abilities and experience necessary to drive our customer-focused transformation of the digital market, within an enterprise of our scale, breadth and complexity; Pay for superior results and sustainable growth by rewarding the achievement of challenging short- and long-term performance goals designed to build shareholder value; 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, policies and practices that strike an appropriate balance between risk and reward. Elements and Mix of Compensation to Emphasize Long-Term Performance 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 opportunities at competitive levels. | | | | | | Pay Element | | Characteristics | | Purpose | Base Salary | | Annual fixed cash compensation | | 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;experienced executives Pay for superior results and sustainable growth by rewarding
| Short-Term Incentive Opportunity | | Annual variable cash compensation based on the achievement of challengingpredetermined annual 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; andmeasures
Manage risk through oversight and compensation design features and practices that balance short-term and long-term incentives and cap maximum payments.
| | ElementsMotivate executives to achieve short-term performance goals that will establish the foundation for future growth
| Long-Term Incentive Opportunity | | Long-term variable equity awards granted annually as a combination of compensation The Committee determines the appropriate balance between fixedperformance-based stock units and variable pay elements, short- and long-term pay elements, and cash and equity-based pay elements when setting total compensation opportunities at competitive levels.time-based restricted stock units
| | | | | Pay element | | Characteristics | | Rationale | Base salary
| | Annual fixed cash compensation
| | Attract
| | Align executives’ interests with those of shareholders, encourage efforts to grow long-term value, and retain high-performing and experienced executives | Short-term incentive opportunity
| | Annual variable cash compensation based on the achievement of predetermined annual performance measures
| | Motivate executives to achieve challenging short-term performance targets
| Long-term incentive opportunity
| | Long-term variable equity awards granted annually as a combination of PSUs and RSUs
| | Align executives’ interests with those of shareholders, encourage efforts to grow long-term value, and retain executives
|
While the Committee does not benchmark and target each individual element of compensation 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 to emphasize long-term performance
The Committee believes that a substantial majority of each named executive officer’s total compensation opportunity should be variable and at risk in order to emphasize a performance-based culture. In establishing the mix of incentive pay for the named executive officers, the Committee balances the importance of meeting Verizon’s 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 annual Long-Term Plan awards feature three-year award 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. | | | Verizon 2018 Proxy Statement| | | 31 |
Compensation Discussion and Analysis |Compensation objectives and elements of compensation
than double the annual base salary and short-term incentive target compensation opportunities. Moreover, since the Long-Term Plan features three-year award 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.
For 2017, the Committee allocated approximately 10% of each executive’s 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’ 2017 total compensation opportunity between variable, performance-based elements and fixed pay.
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 Board’s annual strategy session to ensure that our executives’ compensation opportunities are aligned with Verizon’s 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.
In setting the performance targets, the Committee considered the following factors:
Verizon’s short- and long-term strategy;
Economic, industry and competitive environments;
The creation of shareholder value;
The achievement level against 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 Verizon’s operational performance will affect each measure differently; and
With regard to the diversity and sustainability metric in the Short-Term Plan, Verizon’s values and long-term commitment to being a responsible member of the communities we serve.
2017 annual base salary
To determine an executive’s base salary, the Committee, with assistance from the Consultant, considers the pay practices of the Related Dow Peers for comparable positions; the executive’s experience, tenure, scope of responsibility and performance; internal pay alignment; continuity planning and management development considerations; and for newly-hired executives, the Committee also considers the compensation required to attract the executive to the Company. In particular, the Committee focuses on how base salary levels may impact the market competitiveness of an executive’s total compensation opportunity. There is no specific weighting applied to any of these factors in setting annual salaries, and the process ultimately relies on the subjective exercise of the Committee’s judgment.
26Verizon 2020 Proxy Statement
Compensation Discussion and Analysis Performance Target Setting | | | 32 | | |Verizon 2018 Proxy Statement |
2017 variable vs. fixed pay mix
Compensation Discussion and Analysis |2017 annual base salary
Based on its assessment, the Committee approved base salary increases in 2017 of 7.1% for Mr. Ellis, 5.6% for Mr. Stratton and 5.6% for Ms. Walden and a base salary for Mr. Vestberg of Swedish Krona (SEK) 8,082,000 ($900,000 using an exchange rate of 8.98 SEK = 1 U.S. Dollar (USD), which was the SEK to USD exchange rate on February 24, 2017). The Committee approved these base salary levels in order to create an appropriate total compensation opportunity for each officer, in light of the Committee’s reference of the 50th percentile for comparable executives within the Related Dow Peers and the goal of providing a compensation mix that generally targets base salary at approximately 10% of the total compensation opportunity. Applying this same methodology, the Committee determined that Mr. McAdam’s base salary should not be adjusted in 2017, and it remains at the same level established in 2014.
2017 short-term incentive compensation
The Verizon Short-Term Plan motivates executives to achieve challenging short-term performance targets.
In making its 2019 compensation decisions, the Committee considered market data with respect to the mix of annual cash and long-term equity components for similarly situated executives among the Related Dow Peers and allocated approximately 10% of each executive’s 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. Performance Target Setting The Committee takes a holistic approach to establishing performance targets under our incentive plans and ensuring that they are aligned with Verizon’s 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. In setting the performance targets, the Committee considered the following factors: Verizon’s short- and long-term strategy; Economic, industry and competitive environments; The creation of shareholder value; The achievement level against 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 Verizon’s operational performance will affect each measure differently; and With regard to the diversity and environmental sustainability metric in the Short-Term Plan, Verizon’s public goal to reduce our carbon intensity, and our company-wide commitment to diversity and inclusion. 2019 Annual Base Salary To determine an executive’s base salary, the Committee, with assistance from the Consultant, considers the pay practices of the Related Dow Peers for comparable positions; the executive’s experience, tenure, scope of responsibility and performance; internal pay alignment; continuity planning and management development considerations; and for newly-hired executives, the Committee also considers the compensation required to attract the executive to the Company. There is no specific weighting applied to any of these factors in setting annual salaries, and the process ultimately relies on the subjective exercise of the Committee’s judgment. In late 2018, the Committee approved the following base salaries effective January 1, 2019: $1 million for Mr. Dunne and $850,000 for Ms. Erwin in connection with their new roles as leaders of the Verizon Consumer Group and Verizon Business Group, respectively, and $950,000 for Mr. Ellis. The Committee approved these base salary levels in order to create an appropriate total compensation opportunity for these officers in light of the Committee’s reference of the 50th percentile for comparable executives within the Related Dow Peers and the compensation mix considerations described above. Mr. Vestberg and Mr. Gowrappan did not receive a base salary increase for 2019. Verizon 2020 Proxy Statement 27
Compensation Discussion and Analysis 2019 Short-Term Incentive Compensation 2019 Short-Term Incentive Compensation The Verizon Short-Term Plan motivates executives to achieve challenging short-term performance targets in order to provide the foundation for future growth. 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. In March 2019, the Committee adopted a new Verizon Short Term Incentive Plan to replace the Verizon Short Term Incentive Plan that was scheduled to expire by its terms in May 2019. The new Verizon Short-Term Incentive Plan is substantially similar to the prior plan, but eliminated certain administrative requirements contained in the prior plan relating to the deductibility of performance-based compensation based on attainingpre-established performance measures that were no longer applicable as a result of the enactment of the 2017 Tax Cuts and Jobs Act. The Committee set the values of the 2019 Short-Term Plan award opportunities as a percentage of an executive’s base salary based on both the scope of the executive’s 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 40. For the named executive officers, target award opportunities, expressed as a percentage of base salary, did not change for 2019. However, the dollar value of the 2019 target award opportunities for Messrs. Ellis and Dunne and Ms. Erwin increased from 2019 as a result of the base salary increases described above. The following table shows the 2019 Short-Term Plan target award opportunity for each of the named executive officers. 2019 Short-Term Plan Target Award Opportunity | | | | | | | | | Named Executive Officer | | As a Percentage of Base Salary | | | As a Dollar Value | | Mr. Vestberg | | | 250% | | | | $3,750,000 | | Mr. Ellis | | | 150% | | | | $1,425,000 | | Mr. Dunne | | | 150% | | | | $1,500,000 | | Ms. Erwin | | | 150% | | | | $1,275,000 | | Mr. Gowrappan | | | 150% | | | | $1,275,000 | | | |
Annual Performance Measures In the first quarter of 2019, the Committee established the performance measures for the Short-Term Plan that are consistent with Verizon’s strategic goals. For each such measure, the Committee set a target that challenges executives to drive business results that generate shareholder value. Verizon’s performance with respect to these measures determines the amount of the short-term incentive awards earned by the named executive officers. The 2019 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 Verizon’s executives to achieve outstanding short-term results and, at the same time, help establish the foundation for long-term value for shareholders. The 2019 measures and related targets approved by the Committee are described in detail below. 28Verizon 2020 Proxy Statement
Compensation Discussion and Analysis 2019 Short-Term Incentive Compensation 2019 Short-Term Plan Performance Measures | | | | | | | | | | | 
| | | | | | | | Why these performance measures? The Committee selected adjusted earnings per share (EPS), free cash flow and total revenue to reflect Verizon’s strategic goals of encouraging profitable operations, efficient use of capital and overall growth. The Committee also selected diversity and sustainability metrics to reflect Verizon’s commitments to promoting diversity among our employees and our business partners and to reducing the environmental impact of our operations. | | |
| | | | | | 45% | | Adjusted EPS Target range: $4.55 – $4.64 | | | Verizon’s earnings are a function of the revenue earned from customers and the expenses incurred to serve those customers. As a result, adjusted EPS is a measure of the efficiency with which we are approaching the marketplace – the effectiveness with which we are balancing encouraging customers to start and continue relationships with us and the costs we are incurring to do so. The Committee assigned the greatest weight to adjusted EPS in determining the 2019 awards under the Short-Term Plan because this measure is broadly used and recognized by investors as wella key indicator of ongoing operational performance and profitability. Adjusted EPS excludes special items, such as impairments and gains and losses from divestitures, business combinations, changes in accounting principles, the performance targets requirednet impact of severance, pension and post-retirement benefit costs, extraordinary items and restructurings. As a result, the Committee believes this measure provides meaningful comparisons of our financial results from period to achieve these awards. The Committee setsperiod and reflects the valuesrelative success of the Short-Term Plan award opportunities asongoing business.
| | | | | | | 25% | | Free Cash Flow Target range: $15.7 billion to $17.1 billion | | | Free cash flow is a percentage of an executive’s base salary based on both the scopemeasure of the executive’s responsibilities andcash we have left over after we have made 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 48. For the named executive officers, target award opportunities, expressed as a percentage of base salary, did not change for 2017. However, the dollar value of the 2017 target award opportunities for Mr. Ellis, Mr. Stratton and Ms. Walden increased from 2016 as a result of the base salary increases described above. Mr. McAdam did not receive a salary increase in 2017, so the dollar value of his 2017 target award opportunity was the same as it was in 2015 and 2016. When Mr. Vestberg was hired in April 2017, he was eligible for a full year Short-Term Plan award for 2017, and his target award opportunity was set at 150% of his base salary, which is consistent with target award opportunities as a percentage of base salary that apply to the named executive officers other than Mr. McAdam.
The following table shows the 2017 Short-Term Plan target award opportunity for each of the named executive officers.
2017 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% | | | | $1,125,000 | | Mr. Stratton | | | 150% | | | | $1,425,000 | | Mr. Vestberg | | | 150% | | | | $1,350,000 | * | Ms. Walden | | | 150% | | | | $1,425,000 | |
* | For purposes of presenting Mr. Vestberg’s 2017 Short-Term Plan target award opportunity, his base salary was converted from SEK to USD using an exchange rate of 8.98 SEK = 1 USD, which was the SEK to USD exchange rate on February 24, 2017. |
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 Verizon’s strategic goals. For each such measure, the Committee sets a target that challenges executives to drive business results that generate shareholder value. Verizon’s performance with respect to these measures determines the amount of the short-term incentive awards earned by the named executive officers.
| | | Verizon 2018 Proxy Statement| | | 33 |
Compensation Discussion and Analysis |2017 short-term incentive compensation
| | | 
| | Why these performance measures?
The Committee selected adjusted EPS, free cash flow and total revenue to reflect Verizon’s strategic goals of encouraging profitable operations, efficient use of capital and overall growth. The Committee also selected a diversity and sustainability metric to reflect Verizon’s commitment to promoting diversity among our employees and our business partners, and to reducing the environmental impact of our operations.
|
The 2017 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 Verizon’s executives to achieve outstanding short-term results and, at the same time, help build long-term value for shareholders. The 2017 measures and related targets approved by the Committee are described in detail below. |
| | | 
| | Adjusted EPS
Target range: $3.78 to $3.87
Verizon’s earnings are a function of the revenue earned from customers and the expenses incurred to serve those customers. As a result, adjusted EPS is a measure of the efficiency with which we are approaching the marketplace – the effectiveness with which we are balancing encouraging customers to start and continue relationships with us and the costs we are incurring to do so. 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 special items, such as impairments and gains and losses from divestitures, business combinations, changes in accounting principles, the net impact of severance, pension and post-retirement benefit costs, extraordinary items and restructurings. As a result, 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: $11.5 billion to $12.9 billion
Free cash flow is a measure of the cash we have left over after we have made the capital expenditures we need to makecapital expenditures necessary to continue to provide high-quality services to our customers. As a result, it is an indication of the extent to which we are efficiently using capital. It is also an indication of the amount of cash Verizon has available to return to shareholders in the form of dividends or share repurchases and to increase our financial flexibility by reducing outstanding debt. Free cash flow is calculated by subtracting capital expenditures from the total of cash flow from operations and cash flow from financing and investing activities attributable to device payment plan receivable securitizations.
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| | | 34 | | |Verizon 2018 Proxy Statement |
Compensation Discussion and Analysis |2017 short-term incentive compensation
| | | 
| | Total revenue
Target range: $123.8 billion to $125.2 billion
The Committee views total revenue as an important indicator of Verizon’s growth and success in managing capital investments. This measure also reflects the extent to which we are able to attract and retain customers and the level of penetration of our products and services in key markets. In setting the total revenue target range for 2017, the Committee did not take into account certain revenues attributable to businesses that were acquired during the latter half of 2016 or expected to be acquired in 2017.
| | | 
| | Diversity and sustainability
Targets: At least 59.3% of U.S.-based workforce comprised of minority and female employees; direct at least $4.9 billion of our overall supplier spending to minority- and female-owned firms; reduce our carbon intensity by at least 4.0% compared to the prior year
As a large, multinational company with a highly diverse customer and employee base, we know that our operations are strengthened when we leverage the diversity of thought and cultures of our workforce and suppliers. We are also committed to reducing the environmental impact of our operations because we believe that it is important for us to be good stewards of our planet while we continue to serve our customers.
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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 special items. In determining free cash flow, the Committee made an adjustment for a discretionary pension prefunding contribution made in March 2017, set forth in Appendix A, which was not contemplated when the free cash flow target was set. No awards are paid under the Short-Term Plan if Verizon’s 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).
| | | Verizon 2018 Proxy Statement| | | 35 |
Compensation Discussion and Analysis |2017 short-term incentive compensation
2017 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 2017, this payout percentage was determined to be 93% of the target level. The following table shows the amount of the Short-Term Plan award paid to each named executive officer.
| | | | | Named executive officer
| | Actual 2017 Short-Term Plan award ($)
| | Mr. McAdam
| | | 3,720,000 | | Mr. Ellis
| | | 1,046,250 | | Mr. Stratton
| | | 1,325,250 | | Mr. Vestberg*
| | | 1,255,500 | | Ms. Walden
| | | 1,325,250 | |
* | Mr. Vestberg relocated to the United States in January 2018; therefore, the 2017 STI award paid to Mr. Vestberg in February 2018 was paid in USD. |
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.
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 executive’s 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 when, and only to the extent that, the related PSUs and RSUs are actually earned.
In late 2016 and early 2017, the Committee, with the assistance of the Consultant, undertook a comprehensive review of the structure and mix of the annual equity compensation program. As part of that review, the Committee considered Verizon’s business strategy and focus, feedback the Company received from our shareholders through the shareholder outreach program and market data on competitive pay practices of the Related Dow Peers. In particular, the Committee noted that when granting time-based restricted stock units, a significant number of our peer companies utilize a ratable vesting schedule, with awards vesting in equal annual installments following the grant date, as opposed to a single, longer cliff vesting schedule. Based on this information, to align to market practices and enable us to continue to attract and retain key executive talent, the Committee determined that the RSUs granted to our executives in 2017 would vest ratably over three years, withone-third of the award vesting on each annual anniversary of the grant date. The Committee determined that PSUs would continue to be earned over a three-year performance cycle, with cliff vesting at the end of the three-year period. The Committee believes that a three-year performance cycle is appropriate for the PSU 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.
| | | 36 | | |Verizon 2018 Proxy Statement |
2017 adjusted Company results1 compared against target performance ranges resulting in a [XX]% payout ROE of XX.X%2 [$ icon] $X.XX Adjusted EPS $3.87 $3.78 $X.XX $XX.XB3 Free cash flow $12.9B $11.5B $XX.XB $XXX.XB Total revenue $125.2B $123.8B $XXX.XB 59.3% U.S.-based minority and female employees (XXX target performance) Over $4.9B of our overall supplier spending directed to minority- and female-owned firms (XXX target performance) 4.0% reduction in carbon intensity (XXX target performance)
Compensation Discussion and Analysis |Long-term incentive compensation
The number of PSUs actually earned and paid is determined based upon Verizon’s achievement ofpre-established performance targets over the three-year performance cycle, and the ultimate value of each PSU is based on the closing price of Verizon’s 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 Verizon’s shareholders. RSUs also provide a performance link as the value of the award depends on Verizon’s stock price. Both PSUs and RSUs provide a retention incentive by requiring the executive to remain employed with Verizon through the end of the applicable vesting period, subject to certain qualifying separations.
As in prior award cycles, the 2017 PSUs are payable in cash and the 2017 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 2017 RSU awards in shares is consistent with Verizon’s policy of requiring a significant level of equity ownership by our named executive officers.
2017 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 2017 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 Verizon’s relative TSR, andone-third is eligible to vest based on Verizon’s cumulative free cash flow.
| | |
| | Why these performance measures?
Relative TSR. The Committee understands that our investors have many differentlarge-cap investment options. The Committee believes Verizon’s TSR 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. For this reason, the Committee chose relative TSR as the primary metric for determining the extent to which our management team will earn the PSUs granted under the Long-Term Plan.
Free Cash Flow. As described above, 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.
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The 2017 target award opportunities for each of the named executive officers are shown in the table below. For the named executive officers other than Mr. Vestberg, target award opportunities, expressed as a percentage of base salary, did not change for 2017. The dollar value of the 2017 target award opportunities for Mr. Ellis, Mr. Stratton and Ms. Walden increased from 2016 solely as a result of the base salary increases described above. The dollar value of Mr. McAdam’s 2017 target award opportunity did not change from 2016 because he did not receive a base salary increase in 2017. When Mr. Vestberg was hired in April 2017, he was eligible for a full year Long-Term Plan award for 2017, and his target award opportunity was set at 500% of his base salary, which is consistent with the target award opportunities as a percentage of base salary that apply to Mr. Ellis and Ms. Walden.
| | | Verizon 2018 Proxy Statement| | | 37 |
Long-term incentive program structure 60% PSUs 40% RSUs 2/3 Eligible to vest based on relative TSR 1/3 Eligible to vest based on Cumulative Free Cash Flow Eligible to vest based on continued employment through each applicable vesting date
Compensation Discussion and Analysis |Long-term incentive compensation
The Committee sets the award levels to provide a total compensation opportunity consistent with the Company’s overall compensation philosophy as described above, while maintaining a compensation mix in which each executive’s target annual Long-Term Plan award opportunity represents approximately 70% of that executive’s total 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 Verizon’s common stock on the grant date.
The following table shows the target value of the 2017 Long-Term Plan awards granted to the named executive officers.
2017 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% | | | | $ 3,750,000 | | Mr. Stratton | | | 525% | | | | $ 4,987,500 | | Mr. Vestberg | | | 500% | | | | $ 4,500,000 | * | Ms. Walden | | | 500% | | | | $ 4,750,000 | |
* | For purposes of presenting Mr. Vestberg’s 2017 Long-Term Plan target award opportunity, his base salary was converted from SEK to USD using an exchange rate of 8.98 SEK = 1 USD, which was the SEK to USD exchange rate on February 24, 2017. |
| | | 38 | | |Verizon 2018 Proxy Statement |
Compensation Discussion and Analysis |Long-term incentive compensation
Terms of 2017 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 2017-2019 performance cycle that will vest based on Verizon’s TSR position compared with the companies in the Related Dow Peers as constituted on the date the awards were granted. Verizon’s TSR during the performance cycle must rank at least 15th — the 59th 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 Verizon’s TSR during the three-year performance cycle ranks among the top four companies in the Related Dow Peers — the 91st percentile or higher. If Verizon’s TSR during the three-year performance cycle ranks below 25th — approximately the 29th 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 Verizon’s cumulative free cash flow (FCF PSUs). The percentage of the FCF PSUs awarded for the 2017-2019 performance cycle that will vest is based on the extent to which Verizon’s 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 and investing 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, such as the 2017 Tax Cuts and Jobs Act enactment.
The cumulative FCF target for the 2017-2019 performance cycle was set at a level reflective of our three-year strategic plan, which 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 levelsecuritizations.
| | | | | | | | | Verizon’s TSR rank among
Related Dow Peers | | Percent of TSR PSUs that vest | | | | | 1 | | | 200% | | | | | | 2 | | | 200% | | | | | | 3 | | | 200% | | | | | | 4 | | | 200% | | | | | | 5 | | | 172% | | | | | | 6 | | | 165% | | | | | | 7 | | | 158% | | | | | | 8 | | | 151% | | | | | | 9 | | | 144% | | | | | | 10 | | | 137% | | | | | | 11 | | | 130% | | | | | | 12 | | | 123% | | | | | | 13 | | | 116% | | | | | | 14 | | | 109% | | | | | | 15 | | | 102% | | | | 
| | 16 | | | 95% | | | 17 | | | 88% | | | 18(median) | | | 81% | | | 19 | | | 74% | | | 20 | | | 67% | | | 21 | | | 60% | | | | | | 22 | | | 53% | | | | | | 23 | | | 46% | | | | | | 24 | | | 39% | | | | | | 25 | | | 32% | | | | | | 26 | | | 0% | | | | | | 27 | | | 0% | | | | | | 28 | | | 0% | | | | | | 29 | | | 0% | | | | | | 30 | | | 0% | | | | | | 31 | | | 0% | | | | | | 32 | | | 0% | | | | | | 33 | | | 0% | | | | | | 34 | | | 0% | | | | | | 35 | | | 0% | | | | | |
| | |
Verizon 2020 Proxy Statement 29
Compensation Discussion and Analysis 2019 Short-Term Incentive Compensation | | | | | Verizon 2018 Proxy Statement| | | 39 |
| | 25% | |
Compensation Discussion and Analysis |Long-term incentive compensationTotal Revenue
2015 PSU awards earned in 2017Target range: $132.4 billion to $133.8 billion
| | | With respect Total Revenue reflects the extent to the PSUs awarded in 2015, the Committee determined the number of PSUs that vested for a participant based onwhich we are able to attract and retain customers and the level of penetration of our products and services in key markets. The Committee views this measure as an important indicator of Verizon’s growth and success in realizing its strategic initiatives.
| | | | | | | 5% | | Diversity and Sustainability Targets: At least 60% of U.S.-based workforce comprised of minority and female employees; | | | | direct at least $5.2 billion of our overall supplier spending to minority- and female-owned firms; reduce our carbon intensity — the amount of carbon our business emits divided by the terabytes of data we transport over our networks — by at least 10% compared to the prior year As a large, multinational company with a highly diverse customer and employee base, we know that our operations are strengthened when we leverage the diversity of thought and cultures of our workforce and suppliers. We are also committed to reducing the environmental impact of our operations because we believe that it is important for us to be good stewards of our planet while we continue to serve our customers. | | |
2019 Adjusted Company Results 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 special items. In determining free cash flow, the Committee made adjustments for discretionary pension plan contributions that were not contemplated at the time the free cash flow target was set. 
| 1 | A reconciliation ofnon-GAAP measures to the most directly comparable GAAP measures may be found in Appendix B. |
30Verizon 2020 Proxy Statement
Compensation Discussion and Analysis Long-Term Incentive Compensation 2019 Short-Term Plan award.In addition to considering the Company’s strong performance against the pre-established performance measures, the Committee considered that the Company’s operational and EBITDA (earnings before interest, taxes, depreciation and amortization) performance in the second half of 2019 did not meet management’s expectations, notwithstanding the significant investments Verizon made in its strategic growth areas and the cost reduction initiatives it undertook in 2019. Based on this assessment, the Committee determined the final 2019 Short-Term Plan award as a percentage of the target level for the employees participating in the Short-Term Plan to be 110% of the target level, which reflects a reduction to the payout percentage that would have applied based solely on the Company’s performance against the pre-established performance measures. The following table shows the payout percentage and amount of the Short-Term Plan award paid to each named executive officer. | | | | | | | | | Named Executive Officer | | Payout Percentage | | | As a Dollar Value | | Mr. Vestberg | | | 110% | | | | $4,125,000 | | Mr. Ellis | | | 110% | | | | $1,567,500 | | Mr. Dunne | | | 110% | | | | $1,650,000 | | Ms. Erwin | | | 110% | | | | $1,402,500 | | Mr. Gowrappan | | | 110% | | | | $1,402,500 | |
Long-Term Incentive Compensation The Long-Term Plan is intended to align executives’ and shareholders’ interests and to reward participants for creating long-term shareholder value. Annual Long-Term Plan awards are made in 60% PSUs and 40% RSUs. The value of each PSU or RSU is equal to the value of one share of Verizon common stock. 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 when, and only to the extent that, the related PSUs and RSUs are actually earned. PSUs are earned over a three-year performance cycle, with cliff vesting at the end of the three-year period. The Committee believes that a three-year performance cycle is appropriate for the PSU 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. Commencing with the 2017 annual grant, RSUs vest ratably over three years (as opposed to a single, longer cliff vesting schedule), which aligns with market practices and enables us to continue to attract and retain key executive talent. The number of PSUs actually earned and paid is determined based upon Verizon’s achievement ofpre-established performance targets over the three-year performance cycle, and the ultimate value of each PSU is based on the closing price of Verizon’s 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 Verizon’s shareholders. RSUs also provide a performance link as the value of the award depends on Verizon’s stock price. Both PSUs and RSUs provide a retention incentive by requiring the executive to remain employed with Verizon through the end of the applicable vesting period, subject to certain qualifying separations. 2019 Long-Term Plan Award Opportunities In 2019, the Committee established the annual target long-term incentive award opportunities for the named executive officers as a percentage of base salary and set the award levels to provide a total compensation opportunity consistent with the Company’s overall compensation philosophy and the compensation mix considerations described above. The Committee established the 2019 annual target award opportunity for named executive officers, other than Mr. Vestberg, within a range of 400% to 600% of base salary taking into account the market practices for each individual’s role and responsibilities, the individual’s performance, the strategic impact of the individual’s role and internal pay alignment. Based on the Committee’s assessment, the Committee approved a 2019 target award opportunity of 600% for each of the named Verizon 2020 Proxy Statement 31
Compensation Discussion and Analysis Long-Term Incentive Compensation executive officers other than Mr. Vestberg. Upon Mr. Vestberg’s promotion to CEO in August 2018, the Committee approved an increase in Mr. Vestberg’s annual long-term target award opportunity to 800% of his base salary commencing with the 2019 annual long-term incentive award. The 2019 target award opportunity for the named executive officers was allocated between PSUs and RSUs as noted above, and the target award opportunity allocated to each type of award was converted into a target number of units using the closing price of Verizon’s common stock on the grant date. The following table shows the target value of the 2019 Long-Term Plan awards granted to the named executive officers. 2019 Long-Term Plan Target Award Opportunity | | | | | | | | | | Named Executive Officer | | As a Percentage of Base Salary | | | As a Dollar Value | | Mr. Vestberg | | | 800% | | | | $12,000,000 | | Mr. Ellis | | | 600% | | | | $5,700,000 | | Mr. Dunne | | | 600% | | | | $6,000,000 | | Ms. Erwin | | | 600% | | | | $5,100,000 | | Mr. Gowrappan | | | 600% | | | | $5,100,000 | |
In 2019, the Committee determined that the Long-Term Plan award should incentivize our executives to deliver superior total shareholder return (TSR) performance and create free cash flow (FCF), as well as encourage retention among our highly-qualified team. To that end, consistent with past practice, each of the named executive officers received 60% of their 2019 Long-Term Plan award in the form of PSUs and 40% in the form of RSUs.Two-thirds of the 2019 PSUs are eligible to vest based on Verizon’s relative TSR, andone-third is eligible to vest based on Verizon’s cumulative free cash flow. | | | | | | | Long-Term Incentive Program Structure | | | | | | | | 
| | |
As in prior award cycles, the 2019 PSUs are payable in cash and the 2019 RSUs are payable in Verizon shares. The Committee generally seeks to balance the potential shareholder dilution from paying awards in shares with cash flow considerations. In addition, paying the 2019 RSU awards in shares is consistent with Verizon’s policy of requiring a significant level of equity ownership by our named executive officers. Terms of 2019 PSU Awards Total Shareholder Return Metric Two-thirds of the 2019 PSUs will vest based on Verizon’s TSR position compared with the companies in the Related Dow Peers as constituted on the date the awards were granted (TSR PSUs). Verizon’s TSR during the performance cycle must rank at least 16th (approximately the 56th 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 TSR PSUs will vest at their maximum level (200% of target) only if Verizon’s TSR during the three-year performance cycle ranks among the top four companies in the Related Dow Peers — the 91st percentile or higher. If Verizon’s TSR during the three-year performance cycle ranks below 26th (approximately the 26th percentile) of the companies in the Related Dow Peers, none of the TSR PSUs will vest. The number of TSR PSUs that will vest in between these performance levels is determined by linear interpolation between vesting percentage levels. 32Verizon 2020 Proxy Statement
Compensation Discussion and Analysis Long-Term Incentive Compensation Free Cash Flow Metric One-third of the 2019 PSUs will vest based on Verizon’s cumulative free cash flow (FCF PSUs). The percentage of the FCF PSUs awarded for the 2019-2021 performance cycle that will vest is based on the extent to which Verizon’s 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 and investing 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 2019-2021 performance cycle was set at a level reflective of our three-year strategic plan, which 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 is determined by linear interpolation between vesting percentage levels. | | | | | | | | Why these performance measures | | ? | | | Relative TSR. The Committee understands that our investors have many differentlarge-cap investment options. The Committee believes Verizon’s TSR compared to the TSR of the two performance metrics over the three-year performance cycle: 2015-2017 TSR PSUs.Two-thirds of the PSUs awarded were eligible to vest based on Verizon’s TSR ranking for the 2015-2017 performance cycle relative tocompanies in the Related Dow Peers as constituted on the date the award was granted.is a valuable 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 percentage of TSR PSUs awarded for the 2015-2017 performance cycle that would vest at each level of Verizon’s relative TSR positioning was identical to the percentage at each performance level for the 2017-2019 grant shown on the prior page. Over the three-year performance cycle ending December 31, 2017, Verizon’s TSR ranked 26th among the Related Dow Peers, resulting in a vesting percentage of 0% for the TSR PSUs.
2015-2017 FCF PSUs.One-third of the PSUs awarded was eligible to vest based on Verizon’s cumulativeCommittee views free cash flow over the 2015-2017 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 Verizon’s cumulative free cash flow over the 2015-2017 performance cycle at different performance levels.
| | | | | Verizon’s cumulative free cash flow (in billions) | | Percentage of awarded FCF PSUs that vest1 | | Greater than $44.0 | | | 200% | | $41.0 | | | 150% | | $38.0 | | | 100% | | $32.0 | | | 50% | | Less than $32.0 | | | 0% | |
1 | For achievement between the stated levels, vesting is determined by linear interpolation. |
At the time the 2015-2017 award was granted, the Committee provided for free cash flow to be determined onas 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 special items. In determining Verizon’s free cash flow over the performance cycle, the Committee included the cash flow from financing and investing activities attributable to device payment plan securitizations in the calculation of free cash flow, and made an adjustment for a discretionary pension prefunding contribution made in March 2017, which was not contemplated when the FCF PSU targets were set. This adjustment is set forth in Appendix A. In accordance with thispre-established adjustment methodology, the Committee determined that Verizon’s cumulative free cash flow over the performance cycle was $46.7 billion, which resulted in a vesting percentage of 200% for the FCF PSUs.
2015-2017 PSU payout. Based on the results described above, in the first quarter of 2018 the Committee approved a payment to all participants in the Long-Term Plan, including the named executive officers, of 67% of the PSUs awarded for the 2015-2017 performance cycle, which represents the weighted average of the two vesting percentages described above, plus dividend equivalents credited on those vested PSUs.
Additional compensation actions in 2017
Hiring of Mr. Vestberg as Executive Vice President, President — Global Networks and Chief Technology Officer.To strengthen Verizon’s leadership position in next generation technology, and as partimportant indicator of our succession planning process, on April 3, 2017 Verizon hired Mr. Vestbergsuccess because it measures our ability to lead Verizon’s Network and Technology team. The Committee believes that Mr. Vestberg is uniquely qualified and brings a set of skills and experiences that are ideally suited to further develop the architecture for Verizon’s fiber-centric networks and to position the Company for long-term growth. The Committee approved a compensation package for Mr. Vestberg that is competitive with industry practice, and includes aone-time RSU award and signing bonus. Theone-time RSU award was granted to Mr. Vestberg on May 4, 2017, with a grant date value of approximately $3 million. The RSUs will vest after the completion of a three-year award period ending on May 4, 2020, provided that Mr. Vestberg remains employed throughout the award period. The RSU award, including accrued dividends, willgenerate cash from operations, which may be settled in shares of Verizon common stock, and Mr. Vestberg will be required to hold any such shares (net of withholding taxes) for at least two years following the vesting date unless he dies or becomes disabled. Theone-time RSU
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Compensation Discussion and Analysis |Long-term incentive compensation
award further enhances his immediate financial stake in Verizon, and the long-term vesting schedule also serves as a retention mechanism. In addition, Mr. Vestberg received a $1 million signing bonus that became payable upon his relocation to the United States from Sweden in January 2018. Mr. Vestberg is required to repay the signing bonus if he voluntarily leaves Verizon or is terminated for cause at any time prior to the one year anniversary of the date he relocated to the United States.
One-time PSU award for Mr. Stratton.As the leader of Verizon’s global operations, Mr. Stratton is responsible for managing and growing Verizon’s established businesses, including the Company’s wireless and wireline consumer and B2B units: Verizon Wireless, Verizon Enterprise Solutions, Verizon Partner Solutions, Verizon Consumer Markets and Verizon Business Markets. These businesses generate approximately $120 billion in annual revenue and serve more than 120 million customers. As part of the succession planning process, in March 2017 the Committee considered Mr. Stratton’s critical role in the Company’s success, the fact that he is retirement eligible, and the competition for executive talentreinvested in our industry, and determined that it was appropriatebusiness, used to provide him with aone-time PSU award for retention and succession planning purposes. Theone-time PSU award is 100% performance-based, and the amount Mr. Stratton will ultimately receive is predicated on driving ROE over the multi-year performance period. The Committee chose ROE as the performance measure for thisone-time award because it is a strong indicator of the extentmake acquisitions or pay outstanding debt, or returned to which the Company is able to generate profit with the money our shareholders have invested in the Company and provides a significant link to shareholder value creation. ROE is not utilized as a performance measure under either the Short-Term or Long-Term Plan. The award was granted to Mr. Stratton on March 14, 2017, with a grant date fair value of approximately $6 million. In determining the value of the award, the Committee considered the factors above and noted that while aone-time award such as this is substantial in the first year, the Committee believes the proper way to consider the award is as compensation for, and apportioned over, the three-year award period plus theone-year period during which Mr. Stratton will be required to hold the shares he receives on vesting.
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 thepre-established performance criterion is achieved and Mr. Stratton remains employed throughout the award period. The percentage of PSUs granted that will vest at the end of the three-year award period will be determined based on Verizon’s average annual ROE during the three-year period beginning January 1, 2017 and ending December 31, 2019. No PSUs will vest unless Verizon’s three-year average ROE meets a minimum threshold percentage of 30%. If Verizon’s three-year average ROE meets the target percentage of 45%, 100% of the PSUs granted will vest. If Verizon’s three-year average ROE is at least 60%, a maximum of 150% of the PSUs granted will vest. If Verizon’s 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 Verizon’s 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.
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 and not intended to be a significant portion of their overall pay package. No named executive officer is eligible for a taxgross-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.
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.
| | | Verizon 2018 Proxy Statement| | | 41 |
Compensation Discussion and Analysis |Other elements of the compensation program
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 executive’s income.
For additional information on these benefits, see footnote 4 to the “Summary compensation” table on page 47.
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 Verizon’spay-for-performance culture. Accordingly, effective June 30, 2006, Verizon froze all future pension accruals under its managementtax-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 50. In addition, effective June 30, 2006, the Committee froze eligibility forVerizon-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 Verizon’s named executive officers are eligible forVerizon-subsidized retiree medical benefits.
During 2017, all of Verizon’s named executive officers were eligible to participate in Verizon’stax-qualified defined contribution savings plan, the Verizon Management Savings Plan, referred to as the Savings Plan, and Verizon’s 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 limiteddividends 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. Prior to 2018, the Deferral Plan also permitted participants to defer long-term incentive compensation, but these deferrals were 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 2017. 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.
The Senior Manager Severance Plan is generally consistent with the terms and conditions of Verizon’s 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 alump-sum cash separation payment equal to a multiple of his or her base salary plus target short-term incentive opportunity,through share repurchases.
Verizon 2018 Proxy Statement |
Compensation Discussion and Analysis |Other elements of the compensation program 2020 Proxy Statement 33
Compensation Discussion and Analysis Long-Term Incentive Compensation 2017 PSU Awards Earned in 2019 With respect to the PSUs awarded in 2017, 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: 2017-2019 TSR PSUs.Two-thirds of the PSUs awarded were eligible to vest based on Verizon’s TSR ranking for the 2017-2019 performance cycle relative to the Related Dow Peers as constituted on the date the award was granted. The accompanying chart shows the percentage of the TSR PSUs awarded for the 2017-2019 performance cycle that would vest based on Verizon’s TSR position compared with the companies in the Related Dow Peers as constituted on the date the awards were granted. Over the three-year performance cycle ending December 31, 2019, Verizon’s TSR ranked 20th among the Related Dow Peers, resulting in a vesting percentage of 67% for the TSR PSUs. 2017-2019 FCF PSUs.One-third of the PSUs awarded was eligible to vest based on Verizon’s cumulative free cash flow over the 2017-2019 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 Verizon’s cumulative free cash flow over the 2017-2019 performance cycle at different performance levels. | | | | | | Verizon’s Cumulative Free Cash Flow (in billions) | | Percentage of
Awarded FCF
PSUs that Vest1 | | Greater than $39.3 | | | 200% | | $36.7 | | | 150% | | $34.1 | | | 100% | | $28.3 | | | 50% | | Less than $28.3 | | | 0% | |
| 1 | along with continuing medical coverage forFor achievement between the applicable severance period. To the extent that a senior managerstated levels, vesting 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.
In connection with her separation from service on February 28, 2018, Ms. Walden became entitled to separation benefits under the Senior Manager Severance Plan, which are described in more detail on page 57. Ms. Walden did not receive any enhanced benefits upon her separation of service.
Consistent with the Committee’s 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 a participant’s employment is terminated without cause, all of that participant’s then-unvested PSUs will fully vest at the target level performance, then-unvested RSUs will fully vest, and those 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 Verizon’s 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.
The CEO is required to maintain share ownership equal to at least seven times base salary.
Other named executive officers are required to maintain share ownership equal to at least four times base salary.
Executives are prohibited from hedging, short-selling or engaging in any financial activity that would allow them to benefit from a decline in Verizon’s stock price.
In determining whether an executive meets the required ownership level, the calculation includes any shares helddetermined by the executive directly or through a broker, shares held through the Verizontax-qualifiedlinear interpolation.
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At the time the 2017-2019 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 special items. In determining Verizon’s free cash flow over the performance cycle, the Committee made an adjustment for discretionary pension plan contributions made in 2017, 2018 and 2019, which were not contemplated when the FCF PSU targets were set and made an adjustment to normalize the impacts of the 2017 Tax Cuts and Jobs Act on free cash flow results. These adjustments are set forth in Appendix B. In accordance with thispre-established adjustment methodology, the Committee determined that Verizon’s cumulative free cash flow over the performance cycle was $45.6 billion, which resulted in a vesting percentage of 200% for the FCF PSUs. 2017-2019 PSU payout. Based on the results described above, in the first quarter of 2020 the Committee approved a payment to all participants in the Long-Term Plan, including the named executive officers, of 112% of the PSUs awarded for the 2017-2019 performance cycle plus dividend equivalents credited on those vested PSUs, which represents the weighted average of the two vesting percentages described above. TSR PSU Vesting by Performance Level for 2017-2019 TSR PSUs savings plan or the Verizon nonqualified savings plan and other deferred compensation plans and arrangements that are valued by reference to Verizon’s 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 has engaged in any pledging transaction with respect to shares of Verizon’s stock. 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 executive’s duties that results in significant reputational or financial harm to Verizon. In addition, all of Verizon’s executives who receive equity grants under Verizon’s 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 executive’s willful misconduct or gross negligence. The Committee reviews these policies periodically.
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Compensation Discussion and Analysis |Other compensation policies
| | | | | Verizon’s TSR Rank Among Related Dow Peers | | Percent of TSR PSUs that Vest | | | | 1 | | > | | 200% | | | | 2 | | > | | 200% | | | | 3 | | > | | 200% | | | | 4 | | > | | 200% | | | | 5 | | > | | 172% | | | | 6 | | > | | 165% | | | | 7 | | > | | 158% | | | | 8 | | > | | 151% | | | | 9 | | > | | 144% | | | | 10 | | > | | 137% | | | | 11 | | > | | 130% | | | | 12 | | > | | 123% | | | | 13 | | > | | 116% | | | | 14 | | > | | 109% | | | | 15 | | > | | 102% t Target Vesting | | | | 16 | | > | | 95% | | | | 17 | | > | | 88% | | | | 18 | | > | | 81% t Median | | | | 19 | | > | | 74% | | | | 20 | | > | | 67% | | | | 21 | | > | | 60% | | | | 22 | | > | | 53% | | | | 23 | | > | | 46% | | | | 24 | | > | | 39% | | | | 25 | | > | | 32% | | | | 26 | | > | | 0% | | | | 27 | | > | | 0% | | | | 28 | | > | | 0% | | | | 29 | | > | | 0% | | | | 30 | | > | | 0% | | | | 31 | | > | | 0% | | | | 32 | | > | | 0% | | | | 33 | | > | | 0% | | | | 34 | | > | | 0% | | | | 35 | | > | | 0% |
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 executive’s base salary plus Short-Term Plan target opportunity. The policy defines severance pay broadly to include payments for any consulting services, payments to secure anon-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
On December 22, 2017, the Tax Cuts and Jobs Act (“TCJA”) was enacted. The TCJA significantly revised the income tax deductibility of executive compensation. Based on the changes introduced by the TCJA, a publicly-held company is generally prohibited from deducting compensation paid to a current or former named executive officer that exceeds $1 million during the tax year. Certain awards granted before November 2, 2017, which were based upon attainingpre-established performance measures set by the company’s compensation committee under a plan approved by the company’s shareholders, as well as amounts payable to former executives pursuant to a written binding contract that was in effect on November 2, 2017, may qualify for an exception to the $1 million deductibility limit.
The Committee takes this deductibility limitation into account in its consideration of compensation matters. However, 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 awarding compensation that may not be deductible for tax purposes. There can be no assurance that any compensation in excess of $1 million 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.
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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 Verizon’s Annual Report on Form10-K for the year ended December 31, 2017.
34Verizon 2020 Proxy Statement
Compensation Discussion and Analysis 2020 Compensation Program Changes 2020 Compensation Program Changes Commencing in June 2019, the Committee undertook a holistic review of our incentive programs focusing on areas to preserve, strengthen and transform to ensure that our programs continue to reflect our compensation guiding principles, take into account input from many of our largest investors, and strengthen our pay for performance alignment in light of our new organizational structure. As a result of this review, and in consultation with its independent compensation consultant, the Committee made changes to the company’s short-term incentive and long-term incentive programs commencing with the 2020 incentive plan awards. Please see the section titled “Compensation” in the letter to our shareholders at the beginning of this proxy statement for a summary of the changes to the 2020 executive compensation program. 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 and not intended to be a significant portion of their overall pay package. No named executive officer is eligible for a taxgross-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. 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 executive’s income. For additional information on these benefits, see footnote 4 to the Summary Compensation Table on page 40. 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 Verizon’spay-for-performance culture. Accordingly, effective June 30, 2006, Verizon froze all future pension accruals under its managementtax-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 43. During 2019, all of Verizon’s named executive officers were eligible to participate in Verizon’stax-qualified defined contribution savings plan, the Verizon Management Savings Plan, referred to as the Savings Plan, and Verizon’s 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, executives may defer “eligible pay,” which includes base salary 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 Verizon 2020 Proxy Statement 35
Compensation Discussion and Analysis Other Compensation Policies deferred into the Savings Plan. Prior to 2018, the Deferral Plan also permitted participants to defer long-term incentive compensation, but these deferrals were not eligible for Company matching contributions. In 2019, all participants in both the Savings Plan and the Deferral Plan were 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 2019. All senior managers (including all named executive officers except Mr. Vestberg) 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. As CEO, Mr. Vestberg 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. The Senior Manager Severance Plan is generally consistent with the terms and conditions of Verizon’s 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 alump-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. Vestberg, 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. Consistent with the Committee’s 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 a participant’s employment is terminated without cause, all of that participant’s then-unvested PSUs will fully vest at the target level performance, then-unvested RSUs will fully vest, and those 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 Verizon’s 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 five years of assuming their leadership roles. The CEO is required to maintain share ownership equal to at least seven times base salary. 36Verizon 2020 Proxy Statement
Compensation Discussion and Analysis Other Compensation Policies Other named executive officers are required to maintain share ownership equal to at least four times base salary. 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 Verizontax-qualified savings plan or the Verizon nonqualified savings plan and other deferred compensation plans and arrangements that are valued by reference to Verizon’s 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 has engaged in any pledging transaction with respect to shares of Verizon’s stock. Policy on Hedging Company Stock Verizon believes that ownership of Verizon stock by the Company’s executives and members of the Board of Directors promotes alignment of the interests of the Company’s leadership with those of its stockholders. Verizon recognizes that transactions that are designed to hedge or offset declines in the market value of Verizon stock can disrupt this alignment. Hedging transactions allow the holder to own Verizon stock without the full risks and rewards of ownership, potentially separating the holder’s interests from those of other Verizon shareholders. Therefore, all employees receiving equity-based awards with respect to Verizon stock and members of the Verizon Board of Directors are prohibited from engaging in any transaction involving Verizon stock that is designed to hedge or offset any decrease in the market value of Verizon stock beneficially owned by the employee or Director. This prohibition includes, but is not limited to, buying and/or writing puts and calls, prepaid variable forward contracts, equity swaps, collars, and exchange funds. In addition, the Verizon Code of Conduct prohibits all employees from engaging in any transaction that permits them to benefit from the devaluation of Verizon’s stock, bonds, or other securities, including engaging in short selling or buying “put” options on Verizon stock. Holding Executives Accountable – Verizon’s Clawback Policies The Committee believes it is appropriate to hold senior executives accountable for misconduct that results in significant reputational or financial harm to Verizon. Accordingly, the Committee has adopted the following policies: Senior Executive Clawback Policy. Verizon has the right to cancel or “clawback” the cash- and equity-based incentive compensation of senior executives who engage in willful misconduct in the performance of their duties that results in significant reputational or financial harm to Verizon. Long-Term Plan Clawback Provisions. Annual equity grants under the Verizon Long-Term Plan give the Company the right to (i) require the recipient to forfeit or repay incentive-based compensation (both short-term and long-term) if Verizon is required to materially restate its financial results based on the individual’s willful misconduct or gross negligence while employed by the Company (where such restatement would have resulted in a lower payment being made to the individual) and (ii) enforce any right or obligation that Verizon may have regarding the clawback of incentive-based compensation under federal securities or other applicable laws. These policies do not limit any other rights or remedies Verizon may have in the circumstances, such as terminating the executive or initiating other disciplinary procedures. Disclosure of any clawbacks will be made in accordance with applicable requirements, including, in the case of the named executive officers and if material, in the Compensation Discussion and Analysis section of the proxy statement for the year in which the clawback decision is made. Verizon 2020 Proxy Statement 37
Compensation Discussion and Analysis Tax and Accounting Considerations 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 executive’s base salary plus Short-Term Plan target opportunity. The policy defines severance pay broadly to include payments for any consulting services, payments to secure anon-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 On December 22, 2017, the Tax Cuts and Jobs Act (“TCJA”) was enacted. The TCJA significantly revised the income tax deductibility of executive compensation. Based on the changes introduced by the TCJA, a publicly-held company is generally prohibited from deducting compensation paid to a current or former named executive officer that exceeds $1 million during the tax year. Certain awards granted before November 2, 2017, which were based upon attainingpre-established performance measures set by the company’s compensation committee under a plan approved by the company’s shareholders, as well as amounts payable to former executives pursuant to a written binding contract that was in effect on November 2, 2017, may qualify for an exception to the $1 million deductibility limit. The Committee takes this deductibility limitation into account in its consideration of compensation matters. However, 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 awarding compensation that may not be deductible for tax purposes. There can be no assurance that any compensation in excess of $1 million will in fact be deductible. The Committee also considers the effect of certain accounting rules that apply to the various aspects of the compensation program for our named executive officers. The Committee reviews potential accounting effects in determining whether its compensation actions are in the best interests of Verizon and our shareholders. The Committee has been advised by management that the impact of the variable accounting treatment required for long-term incentive awards payable in cash (as opposed to fixed accounting treatment for awards that are payable in shares) will depend on future stock performance. Compensation Committee Report The Human Resources Committee has reviewed and discussed the Compensation Discussion and Analysis with management. Based on such review and discussions, the Committee recommended to the Board of Directors, and the Board has approved, the inclusion of the Compensation Discussion and Analysis in this proxy statement and Verizon’s Annual Report on Form10-K for the year ended December 31, 2019. Respectfully submitted, The Human Resources Committee Clarence Otis, Jr.,Daniel Schulman, Chair
Richard CarriónMark Bertolini
Melanie Healey Clarence Otis, Jr. Rodney Slater Gregory Wasson
March 5, 2018February 20, 2020
| | | Verizon 2018 Proxy Statement| | | 45 |
38Verizon 2020 Proxy Statement
Compensation Tables Summary compensationCompensation The following table provides information about the compensation paid to each of our named executive officers in 2015, 20162017, 2018 and 2017.2019. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Name and Principal Position (a) | | Year (b) | | | Salary ($) (c) | | | Bonus
($) (d) | | | Stock Awards1 ($) (e) | | | Option
Awards
($) (f) | | | Non-Equity Incentive Plan Compensation2
($) (g) | | | Change in Pension Value and Nonqualified Deferred
Compensation Earnings3 ($) (h) | | | All Other Compensation4 ($) (i) | | | Total ($) (j) | | Lowell McAdam | | | 2017 | | | | 1,600,000 | | | | 0 | | | | 12,000,062 | | | | 0 | | | | 3,720,000 | | | | 73,949 | | | | 543,570 | | | | 17,937,581 | | Chairman and Chief | | | 2016 | | | | 1,600,000 | | | | 0 | | | | 12,000,077 | | | | 0 | | | | 3,200,000 | | | | 233,155 | | | | 641,347 | | | | 17,674,579 | | Executive Officer | | | 2015 | | | | 1,661,538 | | | | 0 | | | | 12,000,065 | | | | 0 | | | | 4,000,000 | | | | 83,092 | | | | 598,965 | | | | 18,343,660 | | Matthew Ellis | | | 2017 | | | | 742,308 | | | | 0 | | | | 3,750,088 | | | | 0 | | | | 1,046,250 | | | | 2,998 | | | | 107,724 | | | | 5,649,368 | | Executive Vice President | | | 2016 | | | | 488,462 | | | | 0 | | | | 1,708,468 | | | | 0 | | | | 410,000 | | | | 1,291 | | | | 89,138 | | | | 2,697,359 | | and Chief Financial Officer | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | John Stratton | | | 2017 | | | | 942,308 | | | | 0 | | | | 10,987,566 | | | | 0 | | | | 1,325,250 | | | | 80,190 | | | | 204,837 | | | | 13,540,151 | | Executive Vice President | | | 2016 | | | | 896,154 | | | | 0 | | | | 4,725,072 | | | | 0 | | | | 1,080,000 | | | | 101,959 | | | | 237,424 | | | | 7,040,609 | | and President — Global Operations | | | 2015 | | | | 894,231 | | | | 0 | | | | 4,593,828 | | | | 0 | | | | 1,312,500 | | | | 52,841 | | | | 203,910 | | | | 7,057,310 | | Hans Vestberg5 | | | 2017 | | | | 807,497 | | | | 0 | | | | 7,500,069 | | | | 0 | | | | 1,255,500 | | | | 0 | | | | 254,353 | | | | 9,817,419 | | Executive Vice President, | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | President — Global Networks and | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Chief Technology Officer | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Marni Walden | | | 2017 | | | | 942,308 | | | | 0 | | | | 4,750,035 | | | | 0 | | | | 1,325,250 | | | | 43,510 | | | | 195,819 | | | | 7,256,922 | | Executive Vice President and | | | 2016 | | | | 896,154 | | | | 0 | | | | 4,500,061 | | | | 0 | | | | 1,080,000 | | | | 55,034 | | | | 216,340 | | | | 6,747,589 | | President — Global Media | | | 2015 | | | | 894,231 | | | | 0 | | | | 4,375,074 | | | | 0 | | | | 1,312,500 | | | | 44,907 | | | | 174,317 | | | | 6,801,029 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Name and Principal Position (a) | | Year
(b) | | | Salary($)
(c) | | | Bonus ($)
(d) | | | Stock
Awards1 ($)
(e) | | | Option
Awards ($)
(f) | | | Non-Equity
Incentive Plan
Compensation2 ($)
(g) | | | Change in
Pension Value and
Nonqualified
Deferred
Compensation
Earnings3($)
(h) | | | All Other
Compensation4 ($)
(i) | | | Total ($)
(j) | | | | | Hans Vestberg | | | 2019 | | | | 1,500,000 | | | | 0 | | | | 12,000,076 | | | | 0 | | | | 4,125,000 | | | | 0 | | | | 470,279 | | | | 18,095,355 | | | Chairman and Chief Executive Officer | | | 2018 | | | | 1,235,385 | | | | 1,000,000 | | | | 16,600,082 | | | | 0 | | | | 2,752,250 | | | | 0 | | | | 618,369 | | | | 22,206,086 | | | | | 2017 | | | | 807,497 | | | | 0 | | | | 7,500,069 | | | | 0 | | | | 1,255,500 | | | | 0 | | | | 254,353 | | | | 9,817,419 | | | | | Matthew D. Ellis | | | 2019 | | | | 950,000 | | | | 0 | | | | 5,700,032 | | | | 0 | | | | 1,567,500 | | | | 0 | | | | 231,385 | | | | 8,448,917 | | Executive Vice President and Chief Financial Officer | | | 2018 | | | | 792,307 | | | | 0 | | | | 4,800,020 | | | | 0 | | | | 1,308,000 | | | | 0 | | | | 160,349 | | | | 7,060,676 | | | | | 2017 | | | | 742,308 | | | | 0 | | | | 3,750,088 | | | | 0 | | | | 1,046,250 | | | | 2,998 | | | | 107,724 | | | | 5,649,368 | | | | | Ronan Dunne | | | 2019 | | | | 1,000,000 | | | | 0 | | | | 6,000,095 | | | | 0 | | | | 1,650,000 | | | | 0 | | | | 303,376 | | | | 8,953,471 | | Executive Vice President and Group CEO – Verizon Consumer | | | 2018 | | | | 846,154 | | | | 0 | | | | 4,250,008 | | | | 0 | | | | 1,389,750 | | | | 0 | | | | 228,214 | | | | 6,714,126 | | | | | Tami A. Erwin | | | 2019 | | | | 850,000 | | | | 0 | | | | 5,100,080 | | | | 0 | | | | 1,402,500 | | | | 127,916 | | | | 230,797 | | | | 7,711,293 | | Executive Vice President and Group CEO – Verizon Business | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | K. Guru Gowrappan | | | 2019 | | | | 850,000 | | | | 0 | | | | 5,100,080 | | | | 0 | | | | 1,402,500 | | | | 0 | | | | 533,358 | | | | 7,885,938 | | Executive Vice President and Group CEO – Verizon Media | | | 2018 | | | | 603,448 | | | | 1,999,998 | | | | 8,695,827 | | | | 0 | | | | 1,020,000 | | | | 0 | | | | 433,665 | | | | 12,752,938 | | | |
| 1 | The amounts in this column reflect the aggregate grant date fair value of the PSUs and RSUs computed in accordance with FASB ASC Topic 718 based on the closing price of Verizon’s common stock on the grant date. For Mr. Gowrappan, the amount in this column with respect to his special performance-based RSU (PRSU) award represents the sum of the grant date fair value of the PRSU award on the April 9, 2018 grant date plus the incremental fair value attributable to the modification of this award on October 5, 2018 as described in footnote 4(3) to the Outstanding Equity Awards at FiscalYear-end table on page 42, in each case computed in accordance with FASB ASC Topic 718 based on the closing price of Verizon’s common stock on the applicable date (the aggregate PRSU grant date fair value). The grant date fair value of PSUseach of the PSU awards granted to the named executive officers in the designated year as part of Verizon’s annual long-term incentive award program, and in the case of Mr. Stratton, the special PSU award granted to Mr. Vestberg in 2017,2018, and the Special PRSU award granted to Mr. Gowrappan in 2018 has been determined based on the vesting of 100% of the nominal PSUs or PRSUs awarded, which is the performance threshold the Company believed was most likely to be achieved under the grantsawards on the grant date. The following table reflects the grant date fair value of these PSUs,the PSU awards, as well as the maximum grant date fair value of these awards based on the closing price of Verizon’s common stock on the grant date if, due to the Company’s performance during the applicable performance cycle, the PSUsPSU awards vested at their maximum level. For Mr. Gowrappan’s PRSU award, the amount in the following table reflects the aggregate PRSU grant date fair value, as well as the maximum value of this award based on the closing price of Verizon’s common stock on October 5, 2018 (the date on which the award was modified as described in footnote 4(3) to the Outstanding Equity Awards at FiscalYear-end table) if, due to Verizon Media Group’s performance during the applicable performance cycle, the PRSU award vested at its maximum level. |
| | | | Grant Date Fair Value of PSUs | | | Maximum Value of PSUs | | | Grant Date Fair Value of PSUs | | Maximum Value of PSUs | | | Name | | 2015 ($) | | | 2016 ($) | | | 2017 ($) | | | 2017 Special Award ($) | | | 2015 ($) | | | 2016 ($) | | | 2017 ($) | | | 2017 Special Award ($) | | | 2017 ($) | | 2018 ($) | | 2018
Special
Award ($) | | 2019 ($) | | 2017 ($) | | 2018 ($) | | 2018
Special
Award ($) | | 2019 ($) | | Mr. McAdam | | | 7,200,039 | | | | 7,200,036 | | | | 7,200,037 | | | | | | 14,400,078 | | | | 14,400,072 | | | | 14,400,074 | | | | | Mr. Vestberg | | | | 2,700,031 | | | | 3,960,041 | | | | 10,000,030 | | | | 7,200,057 | | | | 5,400,062 | | | | 7,920,082 | | | 20,000,060 | | | 14,400,114 | | | | | | Mr. Ellis | | | | | 1,025,091 | | | | 2,250,043 | | | | | | | | 2,050,182 | | | | 4,500,086 | | | | | | 2,250,043 | | | | 2,880,012 | | | | | | 3,420,008 | | | | 4,500,086 | | | | 5,760,024 | | | | | | 6,840,016 | | Mr. Stratton | | | 2,756,297 | | | | 2,835,043 | | | | 2,992,527 | | | | 6,000,004 | | | | 5,512,594 | | | | 5,670,086 | | | | 5,985,054 | | | | 9,000,006 | | | Mr. Vestberg | | | | | | | 2,700,031 | | | | | | | | | | 5,400,062 | | | | | Ms. Walden | | | 2,625,044 | | | | 2,700,026 | | | | 2,850,021 | | | | | | 5,250,088 | | | | 5,400,052 | | | | 5,700,042 | | | | | | | | | Mr. Dunne | | | | | | 2,550,005 | | | | | | 3,600,057 | | | | | | 5,100,010 | | | | | | 7,200,114 | | | | | | Ms. Erwin | | | | | | | | | | 3,060,025 | | | | | | | | | | 6,120,050 | | | | | | Mr. Gowrappan | | | | | | | | 3,595,811 | | | | 3,060,025 | | | | | | | 10,787,433 | | | 6,120,050 | | | | | |
| 2 | The amounts in this column for 20172019 reflect the 20172019 Short-Term Plan award paid to the named executive officers in February 20182020 as described beginning on page 33.28. |
| 3 | Verizon froze all future pension accruals under its defined benefit plans in 2006. The named executive officers other than Ms. Erwin are not eligible for pension benefits. The amount in this column for 20172019 for Ms. WaldenErwin reflects the sum of the change in the actuarial present value of Ms. Walden’s accumulated benefit under the defined benefit plan of $3,129 and the amount that is considered to be “above-market” earnings on amounts held in nonqualified deferred compensation plans calculated under SEC rules of $40,381. Messrs. Ellis and Stratton are not eligible for pension benefits, so amounts shown in this column reflect only “above-market” earnings for these executives. Mr. Vestberg is not eligible for pension benefits and did not participate in the nonqualified defined contribution plan during 2017. For 2017 there was a reduction in pension value for Mr. McAdam of $114,002 based on the applicable calculation formula. In accordance with SEC rules, because the aggregate change in the actuarial present value of the accumulated benefit under the defined benefit plans was a negative number for 2017,in the amount shownof $127,916. Verizon’s nonqualified deferred compensation plans did not provide a preferential or “above market” rate of interest in this column for 2017 for Mr. McAdam reflects only “above-market” earnings. The “above-market” earnings reported in this column consist of earnings on amounts that the individual2019. |
| | | 46 | | |Verizon 2018 Proxy Statement |
Verizon 2020 Proxy Statement 39
Compensation Tables|Summary compensation Plan-based Awards | has elected to invest in a hypothetical investment option offered to all participants under the nonqualified deferred compensation plans that earns a return rate equal to the long-term, high-grade corporate bond yield average as published by Moody’s Investors Services. The earnings are considered “above-market” under SEC rules because the interest crediting rate for this investment option (which for 2017 was approximately 4.135%) exceeded 120% of the corresponding applicable federal long-term rate established by the Internal Revenue Service (which for 2017 was 3.075%). Verizon’s defined benefit plans were frozen as of June 30, 2006, and Verizon stopped all future benefit accruals under these plans as of that date. All accruals under the Verizon Wireless pension plan were frozen as of December 31, 2006. |
| 4 | The following table provides the detail for 20172019 compensation reported in the “All Other Compensation” column. |
| | Name | | Personal Use of Company Aircrafta ($) | | | Personal Use of Company Vehicleb ($) | | | Company Contributions to the Qualified Savings Planc ($) | | | Company Contributions to the Nonqualified Deferral Plan ($) | | | Company Contributions to
the Life Insurance
Benefitd ($) | | | Othere ($) | | | All Other Compensation Total ($) | | | Personal
Use of
Company
Aircraft ($) | | Personal
Use of
Company
Vehiclea ($) | | Company
Contributions
to the Qualified
Savings Plan ($) | | Company
Contributions to the
Nonqualified
Deferral Plan ($) | | Company
Contributions
to the Life
Insurance
Benefitb($) | | Otherc ($) | | All Other
Compensation
Total ($) | | Mr. McAdam | | | 132,173 | | | | 12,632 | | | | 18,850 | | | | 325,150 | | | | 48,765 | | | | 6,000 | | | | 543,570 | | | | | | | Mr. Vestberg | | | | 0 | | | | 1,846 | | | | 25,050 | | | | 304,811 | | | | 110,757 | | | | 27,815 | | | | 470,279 | | | | | | Mr. Ellis | | | 0 | | | | 0 | | | | 18,850 | | | | 58,998 | | | | 19,118 | | | | 10,758 | | | | 107,724 | | | | 0 | | | | 0 | | | | 25,050 | | | | 165,587 | | | | 27,748 | | | | 13,000 | | | | 231,385 | | Mr. Stratton | | | 0 | | | | 0 | | | | 18,850 | | | | 124,575 | | | | 48,897 | | | | 12,515 | | | | 204,837 | | | Mr. Vestberg | | | 0 | | | | 0 | | | | 241,318 | | | | 0 | �� | | | 35 | | | | 13,000 | | | | 254,353 | | | Ms. Walden | | | 0 | | | | 0 | | | | 18,850 | | | | 124,575 | | | | 39,879 | | | | 12,515 | | | | 195,819 | | | | | | | Mr. Dunne | | | | 0 | | | | 0 | | | | 25,050 | | | | 178,246 | | | | 82,925 | | | | 17,155 | | | | 303,376 | | | | | | Ms. Erwin | | | | 0 | | | | 0 | | | | 25,050 | | | | 136,020 | | | | 58,727 | | | | 11,000 | | | | 230,797 | | | | | | Mr. Gowrappan | | | | 0 | | | | 0 | | | | 25,050 | | | | 105,911 | | | | 2,397 | | | | 400,000 | | | | 533,358 | | | | | |
| | a | The aggregate incremental cost of the personal use of a Company aircraft is determined by multiplying the total 2017 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 executive’s total 20172019 personal miles by the incremental vehicle cost per mile; and (iii) adding the incremental driver cost (the 2017total 2019 driver hours for the executive’s personal use multiplied by the driver’s hourly rate). |
| | cb | This column represents employer contributions to Verizon’stax-qualified defined contribution plans for 2017. For employees other than Mr. Vestberg, it represents the employer contribution to the broad-based savings plan, described further on page 51. For Mr. Vestberg, it represents the employer contribution to the broad-based collectively agreed ITP1 defined contribution retirement plan applicable to employees in Sweden, described further on page 52. |
| d | Executive life insurance is available toUS-based 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 namedMessrs. Vestberg and Dunne and Ms. Erwin, the executive officers who participate in this program,life insurance policy provides a death benefit equal to five times the sum of the executive’s base salary plus his or her Short-Term Plan award opportunity at 67% of target level (capped at $10 million for Messrs. Vestberg and Dunne) if the executive dies before a designated date. For Mr. Ellis, the executive life insurance policy provides a death benefit equal to two times the sum of the executive’shis base salary plus his or herShort-Term Plan award opportunity at 67% of target level if the executivehe dies before a designated date. For all named executive officers who participate, thisThis date is the latest of the participant’s retirement date, the date on which the participant reaches age 60 or the fifth anniversary of plan participation. All of the named executive officers other than Mr. Vestberg participatedGowrappan did not participate in the executive life insurance program in 2017. Because2019. For Mr. Vestberg was employed in Sweden during 2017, he was not eligible to participate inGowrappan, the executive life insurance program. Instead, Mr. Vestberg participated in a broad-based non-discriminatory life insurance program, providing fully-insured life insurance benefits, offered to other employees located in Sweden. The amount for Mr. Vestberg in this column represents the amount of the premiums paid by the Company for Mr. Vestberg’shis participation in thisthe group term life insurance program during 2017.2019. |
| | ec | This column represents the total amount of other perquisites and personal benefits provided. These other benefits consist of: (i) for Mr. McAdam, reimbursement of a portion ofout-of-pocket fees for a routine preventative medical examination; (ii) for Messrs. Ellis and Stratton and Ms. Walden, financial planning services; and (iii)services in the amount of $25,275 for Mr. Vestberg, $13,000 for Mr. Ellis, $17,155 for Mr. Dunne and $11,000 for Ms. Erwin, and (ii) relocation expenses of $2,540 for Mr. Vestberg in connection to his relocation from Sweden to the United States.States and $400,000 for Mr. Gowrappan in connection with his relocation from San Francisco to New York. 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 Company’s payment for the services, up to $13,000.services. |
5 | Salary paid to Mr. Vestberg in 2017, as well as the Company’s 2017 contribution to the retirement plan and payment of the life insurance premium for Mr. Vestberg’s participation in those plans were paid in Swedish krona (SEK); the amounts were converted from SEK to USD in the above table using the exchange rate on December 29, 2017 (8.20760 SEK = 1 USD). |
| | | Verizon 2018 Proxy Statement| | | 47 |
Compensation Tables |Plan-based awards
Plan-based awardsAwards
The following table provides information about the 20172019 awards granted under the Short-Term Plan and the Long-Term Plan to each named executive officer. Grants of plan-based awardsPlan-based Awards | | | | | | | | Estimated Future Payouts UnderNon-Equity Incentive
Plan Awards2 | | Estimated Future Payouts Under Equity Incentive
Plan Awards3 | | All Other
Stock
Awards:
Number of
Shares of
Stock or Units4 (#) (i) | | | All Other
Option
Awards:
Number of
Securities
Underlying Options (#) (j) | | | Exercise
or Base
Price of
Option Awards ($/Sh) (k) | | | Grant Date
Fair Value
of Stock
and Option Awards5 ($) (l) | | | | | | | Estimated Future Payouts
UnderNon-Equity Incentive
Plan Awards2 | | Estimated Future Payouts
Under Equity Incentive Plan Awards3 | | | All Other
Stock
Awards:
Number of
Shares of
Stock or Units4 (#) (i) | | All Other
Option
Awards:
Number of
Securities
Underlying
Options (#) (j) | | Exercise or
Base Price
of Option Awards ($/Sh) (k) | | Grant Date
Fair Value
of Stock
and
Option Awards5
($) (l) | | Name (a) | | Type of
Award1 | | Grant Date (b) | | Threshold ($) (c) | | Target ($) (d) | | Maximum ($) (e) | | Threshold (#) (f) | | Target (#) (g) | | Maximum (#) (h) | | | Type of
Award1 | | 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 | | | | | | | | | | | | | | | | | | | | | Mr. Vestberg | | | | STP | | | | — | | | | 1,875,000 | | | | 3,750,000 | | | | 5,625,000 | | | | | | | | | | | | | | | | | | | | PSU | | | | 3/8/2019 | | | | | | | | | | 47,126 | | | | 127,367 | | | | 254,734 | | | | | | | | | | 7,200,057 | | | | | PSU | | | | 3/3/2017 | | | | | | | | | | 54,622 | | | | 143,742 | | | | 287,484 | | | | | | | | | | 7,200,037 | | | | RSU | | | | 3/8/2019 | | | | | | | | | | | | | | | | 84,911 | | | | | | | | 4,800,019 | | | | | | RSU | | | | 3/3/2017 | | | | | | | | | | | | | | | | 95,828 | | | | | | | | 4,800,025 | | | | Mr. Ellis | | | STP | | | | — | | | | 562,500 | | | | 1,125,000 | | | | 1,687,500 | | | | | | | | | | | | | | | | | | STP | | | | — | | | | 712,500 | | | | 1,425,000 | | | | 2,137,500 | | | | | | | | | | | | | | | | | | | PSU | | | | 3/3/2017 | | | | | | | | | | 17,070 | | | | 44,920 | | | | 89,840 | | | | | | | | | | 2,250,043 | | | | PSU | | | | 3/8/2019 | | | | | | | | | | 22,385 | | | | 60,499 | | | | 120,998 | | | | | | | | | | 3,420,008 | | | | | | RSU | | | | 3/3/2017 | | | | | | | | | | | | | | | | 29,947 | | | | | | | | 1,500,045 | | | | RSU | | | | 3/8/2019 | | | | | | | | | | | | | | | | 40,333 | | | | | | | | 2,280,024 | | Mr. Stratton | | | STP | | | | — | | | | 712,500 | | | | 1,425,000 | | | | 2,137,500 | | | | | | | | | | | | | | | | | | | | | Mr. Dunne | | | | STP | | | | — | | | | 750,000 | | | | 1,500,000 | | | | 2,250,000 | | | | | | | | | | | | | | | | | | | PSU | | | | 3/3/2017 | | | | | | | | | | 22,702 | | | | 59,743 | | | | 119,486 | | | | | | | | | | 2,992,527 | | | | PSU | | | | 3/8/2019 | | | | | | | | | | 23,563 | | | | 63,684 | | | | 127,368 | | | | | | | | | | 3,600,057 | | | | | PSU | | | | 3/14/2017 | | | | | | | | | | 60,778 | | | | 121,556 | | | | 182,334 | | | | | | | | | | 6,000,004 | | | | RSU | | | | 3/8/2019 | | | | | | | | | | | | | | | | 42,456 | | | | | | | | 2,400,038 | | | | | | RSU | | | | 3/3/2017 | | | | | | | | | | | | | | | | 39,829 | | | | | | | | 1,995,035 | | | | Mr. Vestberg | | | STP | | | | — | | | | 675,000 | | | | 1,350,000 | | | | 2,025,000 | | | | | | | | | | | | | | | | | Ms. Erwin | | | | STP | | | | — | | | | 637,500 | | | | 1,275,000 | | | | 1,912,500 | | | | | | | | | | | | | | | | | | | PSU | | | | 4/3/2017 | | | | | | | | | | 20,862 | | | | 54,901 | | | | 109,802 | | | | | | | | | | 2,700,031 | | | | PSU | | | | 3/8/2019 | | | | | | | | | | 20,028 | | | | 54,131 | | | | 108,262 | | | | | | | | | | 3,060,025 | | | | | RSU | | | | 4/3/2017 | | | | | | | | | | | | | | | | 36,601 | | | | | | | | 1,800,037 | | | | RSU | | | | 3/8/2019 | | | | | | | | | | | | | | | | 36,088 | | | | | | | | 2,040,055 | | | | | | RSU | | | | 5/4/2017 | | | | | | | | | | | | | | | | 65,388 | | | | | | | | 3,000,001 | | | | Ms. Walden | | | STP | | | | — | | | | 712,500 | | | | 1,425,000 | | | | 2,137,500 | | | | | | | | | | | | | | | | | Mr. Gowrappan | | | | STP | | | | — | | | | 637,500 | | | | 1,275,000 | | | | 1,912,500 | | | | | | | | | | | | | | | | | | | PSU | | | | 3/3/2017 | | | | | | | | | | 21,621 | | | | 56,898 | | | | 113,796 | | | | | | | | | | 2,850,021 | | | | PSU | | | | 3/8/2019 | | | | | | | | | | 20,028 | | | | 54,131 | | | | 108,262 | | | | | | | | | | 3,060,025 | | | | | | RSU | | | | 3/3/2017 | | | | | | | | | | | | | | | | 37,932 | | | | | | | | 1,900,014 | | | | RSU | | | | 3/8/2019 | | | | | | | | | | | | | | | | 36,088 | | | | | | | | 2,040,055 | | | | | |
40Verizon 2020 Proxy Statement
Compensation Tables Plan-based Awards | 1 | These awards are described in the Compensation Discussion and Analysis beginning on page 33.28. |
| 2 | The actual amount awarded in 20172019 was paid in February 20182020 and is shown in column (g) of the “Summary compensation”Summary Compensation table on page 46.39. |
| 3 | These columns reflect the potential payout range of PSU awards granted in 20172019 to our named executive officers in accordance with the Company’s annual long-term incentive award program, as described beginning on page 36.31. 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 Verizon’s relative TSR position as compared with the Related Dow Peers and Verizon’s cumulative free cash flow over the three-year performance cycle as described in more detail beginning on page 39.32. PSUs and the applicable dividend equivalents are paid only if 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 that would be payable on the total number of PSUs credited as of the dividend distribution date and divided by the fair market valueclosing price of the Company’s common stock on that date. These columns also include a special PSU award granted to Mr. Stratton on March 14, 2017 with a payout range between 0% and 150%. With respect to the March 14, 2017 PSU grant to Mr. Stratton, the number of PSUs that vest at the end of the three-year award period ending March 13, 2020 will be determined based on Verizon’s average annual ROE during the three-year performance period beginning January 1, 2017 and ending December 31, 2019, and the final award will include dividend equivalents that accrue on the vested portion of the award. No PSUs will vest unless Verizon’s three-year average annual ROE meets the minimum threshold of 30%. If Verizon’s three-year average annual ROE meets the target percentage of 45%, 100% of the nominal number of PSUs granted will vest. If Verizon’s three-year average annual ROE is at least 60%, a maximum of 150% of the PSUs granted will vest. If Verizon’s three-year average annual 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 Verizon’sthree-year average annual 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. |
| 4 | This column reflects the RSU awardsnumber of RSUs granted in 20172019 to the named executive officers including a special award granted to Mr. Vestberg in connection with his hiring, in accordance with the Company’s 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 that would be payable on the total number of RSUs credited as of the dividend distribution date and divided by the fair market valueclosing price of the Company’s common stock on that date. These dividend equivalents are only distributed to the award holder if and when the award vests. |
| 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 Verizon’s 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. |
| | | 48 | | |Outstanding Equity Awards at FiscalYear-endVerizon 2018 Proxy Statement |
Compensation Tables |Plan-based awards
Outstanding equity awards at fiscal year-end
| | | | Option Awards | | Stock Awards | | | 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
Vested1,2,4 (#) (g) | | Market Value
of Shares or Units of Stock That Have Not Vested1,2,4,5 ($) (h) | | Equity
Incentive
Plan Awards: Number of
Unearned
Shares, Units
or Other Rights That Have Not Vested1,3,6 (#) (i) | | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested1,3,6,7 ($) (j) | | Grant Date | | | 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 ($) (e) | | Option Expiration
Date (f) | | Number of Shares or Units of Stock
That Have Not
Vested1,2 (#) (g) | | Market Value of
Shares or
Units of Stock That
Have Not
Vested3 ($) (h) | | Equity
Incentive
Plan Awards:
Number of
Unearned
Shares, Units
or Other
Rights That
Have Not
Vested4,5 (#) (i) | | Equity Incentive Plan Awards:
Market or
Payout Value of Unearned
Shares, Units or Other Rights That
Have Not
Vested6 ($) (j) | | Grant Date | | Mr. McAdam | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 100,532 | | | | 5,321,159 | | | | 107,066 | | | | 5,667,003 | | | | 3/4/2016 | | | | | | | Mr. Vestberg | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 13,811 73,095 38,866 0 87,636 | | | | 847,995 4,488,033 2,386,372 0 5,380,850 | | | | 0 0 149,537 407,774 151,172 | | | | 0 0 9,181,572 25,037,324 9,281,961 | | |
| 4/3/2017
5/4/2017
3/6/2018
8/1/2018 3/8/2019 |
| | | | | | | | | | | | | | | 99,391 | | | | 5,260,766 | | | | 131,197 | | | | 6,944,257 | | | | 3/3/2017 | | | | Mr. Ellis | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 11,310 | | | | 598,638 | | | | 12,046 | | | | 637,595 | | | | 3/4/2016 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | |
| 11,300
28,267 41,627 |
| |
| 693,820
1,735,594 2,555,898 |
| | | 0 108,753 71,806 | | | | 0 6,677,434 4,408,888 | | | | 3/3/2017 3/6/2018 3/8/2019 | | | | | | | | | | | | | | | 3,157 | | | | 167,100 | | | | 3,362 | | | | 177,951 | | | | 11/1/2016 | | | | Mr. Dunne | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 12,430 0 25,028 43,818 | | | | 763,202 0 1,536,719 2,690,425 | | | | 0 43,291 96,292 75,587 | | | | 0 2,658,067 5,912,329 4,641,042 | | |
| 3/3/2017
12/7/2017 3/6/2018 3/8/2019 |
| | | | | | | | | | | | | | | 31,061 | | | | 1,644,059 | | | | 41,000 | | | | 2,170,130 | | | | 3/3/2017 | | | | Mr. Stratton | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 39,585 | | | | 2,095,234 | | | | 42,158 | | | | 2,231,423 | | | | 3/4/2016 | | | Ms. Erwin | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 8,663 0 19,876 37,246 | | | | 531,908 0 1,220,386 2,286,904 | | | | 0 43,291 76,468 64,248 | | | | 0 2,658,067 4,695,135 3,944,827 | | |
| 3/3/2017
12/7/2017 3/6/2018 3/8/2019 |
| | | | | | | | | | | | | | 41,310 | | | | 2,186,538 | | | | 54,529 | | | | 2,886,220 | | | | 3/3/2017 | | | | Mr. Gowrappan | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 78,234 0 37,246 | | | | 4,803,568 0 2,286,904 | | | | 0 69,030 64,248 | | | | 0 4,238,442 3,944,827 | | |
| 4/9/2018
4/9/2018
3/8/2019 |
| | | | | | | | | | | | | | | 0 | | | | 0 | | | | 189,114 | | | | 10,009,804 | | | | 3/14/2017 | | | | Mr. Vestberg | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 37,962 | | | | 2,009,329 | | | | 50,109 | | | | 2,652,269 | | | | 4/3/2017 | | | | | | | | | | | | | | | | | 66,976 | | | | 3,545,040 | | | | 0 | | | | 0 | | | | 5/4/2017 | | | Ms. Walden | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 37,700 | | | | 1,995,461 | | | | 40,150 | | | | 2,125,140 | | | | 3/4/2016 | | | | | | | | | | | | | | | | | 39,343 | | | | 2,082,425 | | | | 51,932 | | | | 2,748,761 | | | | 3/3/2017 | | |
| 1 | In 2016, Mr. Ellis received an incremental equity awardThe amounts listed in connection with his appointment as Chief Financial Officer inthis column represent the formnumber of PSUs and RSUs which may become payable after the completion of the three-year period endingoutstanding on December 31, 2018, provided that Mr. Ellis remains continuously employed, subject2019 with respect to the terms of the award agreements.following awards: |
(1) for all of the named executive officers other than Mr. Vestberg and Mr. Gowrappan, the third tranche of their 2017 annual RSU award granted on March 3, 2017, which vested on March 3, 2020; (2) for Mr. Vestberg, the third tranche of his 2017 annual RSU award granted on April 3, 2017, that is scheduled to vest on April 3, 2020; (3) for all of the named executive officers other than Mr. Gowrappan, the second and third tranches of their annual 2018 RSU award granted on March 6, 2018, one of which vested on March 6, 2020 and one of which is scheduled to vest on March 6, 2021, respectively; (4) for all of the named executive officers, all three tranches of their annual 2019 RSU award granted on March 8, 2019, one of which vested on March 8, 2020 and two of which are scheduled to vest on March 8, 2021 and March 8, 2022, respectively; (5) for Mr. Vestberg, the special RSU award granted to him on May 4, 2017, that is scheduled to vest on May 4, 2020 and will be settled in shares of Verizon common stock which Mr. Vestberg must hold for at least two years following the vesting date; and (6) for Mr. Gowrappan, the second and third tranches of his 2018 annual RSU award granted to him on April 9, 2018 (which comprised his entire 2018 Long-Term Plan award) that are scheduled to vest on April 9, 2020, and April 9, 2021, respectively, and will be settled in cash. | 2 | In 2017, Mr. Vestberg received a special equity award in the form of RSUs which, subject to continued employment, may become payable on May 4, 2020. The RSU award, to the extent vested, will be settled in shares of Verizon common stock, and Mr. Vestberg will be required to hold any such shares for at least two years following the vesting date. |
3 | In 2017, Mr. Stratton received a special equity award in the form of PSUs which may become payable at the end of the three-year award period ending on March 13, 2020, subject to continued employment. The percentage of PSUs that will vest at the end of the three-year award period will be based on Verizon’s average annual ROE during the three-year performance period beginning on January 1, 2017 and ending December 31, 2019. The award, to the extent vested, will be settled in shares of Verizon common stock, and Mr. Stratton will be required to hold any such shares for at least one year following the vesting date. |
4 | The annual 2016 RSU awards, including Mr. Ellis’ incremental 2016 RSU award, vest on December 31, 2018. The annual 2017 RSU awards vest ratably over three years from the grant date with one-third vesting on March 3, 2018, March 3, 2019 and March 3, 2020. Mr. Vestberg’s annual 2017 RSU award vests ratably over three years from the grant date with one-third vesting on April 3, 2018, April 3, 2019 and April 3, 2020. Mr. Vestberg’s special 2017 RSU award vests on May 4, 2020. RSUs accrue quarterly dividends that are reinvested into the participant’s accountparticipants’ accounts 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, 2017.2019. |
Verizon 2020 Proxy Statement 41
Compensation Tables Value realized from stock options and certain stock-based awards 53 | ThisThe amounts in this column representsrepresent the value of the RSU awardsRSUs listed in column (g) based on a share price of $52.93,$61.40, the closing price of Verizon’s common stock on December 29, 2017.31, 2019. |
64 | The annual 2016 and 2017 PSU awards, including Mr. Ellis’ incremental 2016 PSU award, vest on December 31, 2018 and December 31, 2019 respectively. Mr. Stratton’s special 2017 PSU award vests on March 13, 2020, withamounts listed in this column represent the number of PSUs that will vest determined basedor PRSUs outstanding on Verizon’s average annual ROE duringDecember 31, 2019 with respect to the three-year performance cycle in accordance with the termsfollowing awards: |
(1) for all of the named executive officers other than Mr. Gowrappan, their 2018 and 2019 annual PSU awards granted on March 6, 2018 and March 8, 2019, that are scheduled to vest on December 31, 2020 and December 31, 2021, respectively and for Mr. Gowrappan, the annual PSU award granted on March 8, 2019 that is scheduled to vest on December 31, 2021; (2) for Mr. Vestberg, the special PSU award granted to him on August 1, 2018 in connection with his promotion to CEO with a payout range between 0% and 200% of the nominal number of the award agreement. PSUs subject to the award. The number of PSUs that vest at the end of the five-year award period ending July 31, 2023 will be determined based on Verizon’s average annual ROE during that period, and the final award payout will include dividend equivalents that accrue on the vested portion of the award. No PSUs will vest unless Verizon’s five-year average annual ROE meets the minimum threshold of 18%. If Verizon’s five-year average annual ROE meets the target percentage of 28%, 100% of the nominal number of PSUs granted will vest. If Verizon’s five-year average annual ROE is at least 38%, a maximum of 200% of the PSUs granted will vest. If Verizon’s five-year average annual ROE is greater than 18% but less than 28%, the percentage of PSUs that will vest will be between 50% and 100% on an interpolated basis, and if Verizon’s five-year average annual ROE is greater than 28% but less than 38%, the percentage of PSUs that will vest will be between 100% and 200% on an interpolated basis. The award, to the extent vested, will be settled in shares of Verizon common stock, and Mr. Vestberg will be required to hold any such shares for at least two years following the vesting date; (3) for Mr. Gowrappan, the special PRSU award that was granted to him on April 9, 2018 and modified on October 5, 2018. One times the target number of PRSUs awarded, with dividend equivalents, will vest on April 9, 2021, assuming continued employment through that date. Under the original terms of the award, if Verizon Media Group’s cumulative revenue over a three-year performance period beginning January 1, 2018 and ending December 31, 2020 met or exceeded a Verizon Media Group cumulative revenue level for that period set by the Committee, two times the target number of PRSUs granted, with dividend equivalents, would vest. On October 5, 2018, in connection with Mr. Gowrappan’s promotion to CEO of the Verizon Media Group, the Committee modified the award to align the Verizon Media Group cumulative revenue target for the three-year performance period with the Verizon Media Group business plan as in effect when Mr. Gowrappan became CEO and increase the multiplier for the achievement of that target revenue level from two times to three times the target number of PRSUs granted as an additional incentive to drive the Verizon Media Group’s revenue. The award, to the extent vested, will be settled in shares of Verizon common stock. The number of units for Mr. Gowrappan has been rounded to the nearest whole number; (4) for Mr. Dunne and Ms. Erwin, the special PRSU award granted to each of them on December 7, 2017, which will vest at 100% of the PRSUs granted at the end of the three-year period ending on December 31, 2020, assuming continued employment through that date, and which may vest at 150% of the PRSUs granted if Verizon’s Wireless Service Revenue over the three-year performance period meets or exceeds the Wireless Service Revenue level set by the Committee and, to the extent vested, will be settled in shares of Verizon common stock. | 5 | The PSUs and PRSUs accrue quarterly dividends that are reinvested into the participant’s accountparticipants’ accounts as additional PSUs.units. The PSUs and PRSUs, 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 representsrepresent the 20162018 annual PSU awards at a 71%171% vesting percentage, the 20172019 annual PSU awards at a 88%115% vesting percentage, Mr. Vestberg’s special PSU award at a 200% vesting percentage, Mr. Gowrappan’s special PRSU award at a 100% vesting percentage, and Mr. Stratton’s 2017Dunne’s and Ms. Erwin’s special PSU AwardPRSU awards at a 150%100% vesting percentage, in each case including accrued dividend equivalents through December 31, 20172019 that will be paid to the executives if the awards vest at the indicated levels. |
76 | ThisThe amounts in this column representsrepresent the value of the PSU awardsPSUs or PRSUs listed in column (i) based on a share price of $52.93,$61.40, the closing price of Verizon’s common stock on December 29, 2017.31, 2019. |
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:awards: 2015the annual 2017 PSUs that vested on December 31, 2017;2019 for Messrs. Vestberg, Ellis, Dunne, and Ms. Erwin; 2015the second tranche of Mr. Vestberg’s 2017 RSUs that vested on December 31, 2017; andApril 3, 2019; special one-time equity award in the formsecond tranche of the annual 2017 RSUs granted in 2014 to Mr. Ellis that vested on FebruaryMarch 3, 2017.2019 for Messrs. Ellis, Dunne, and Ms. Erwin; | | | Verizon 2018 Proxy Statement| | | 49 |
Compensation Tables |Value realized from stock optionsthe first tranche of annual 2018 RSUs that vested on March 6, 2019 for Messrs. Vestberg, Ellis, Dunne, and certain stock-based awardsMs. Erwin;
the first tranche of Mr. Gowrappan’s 2018 RSUs that vested on April 9, 2019; and the third tranche of Mr. Dunne’s 2016 RSUs that vested on September 19, 2019. Based on the Company’s 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 67%112% of the target number of PSUs granted for the 2015-20172017-2019 performance cycle for all participants, including the named executive officers.participants. The values of the 20152017 PSU awards upon vesting for Mr. McAdam, Mr.Messrs. Vestberg, Ellis, Mr. Stratton,Dunne, and Ms. WaldenErwin were $6,070,322, $599,459, $2,323,821,$4,318,833, $3,533,668, $3,887,035, and $2,213,164,$2,709,173, respectively, and the values of the 2015second tranche of the 2017 RSU awards upon vesting for Mr. McAdam, Mr.Messrs. Vestberg, Ellis, Mr. Stratton,Dunne, and Ms. WaldenErwin were $6,040,121, $596,478, $2,312,261,$787,698, $623,583, $685,928, and $2,202,153,$478,089, respectively. The values of the first tranche of 2018 RSUs upon vesting for Messrs. Vestberg, Ellis, Dunne, Gowrappan and Ms. Erwin were $1,048,344, $762,422, $675,055, $2,213,407, and $536,083, respectively. The value of the third tranche of Mr. Ellis’ specialone-time equity awardDunne’s 2016 RSUs upon vesting was $556,002. Mr. Vestberg was hired in 2017 and did not hold any stock-based awards that vested during 2017.$1,765,689. 42Verizon 2020 Proxy Statement
Compensation Tables Pension plans Option exercisesExercises and stock vestedStock Vested | | | | Option Awards | | | Stock Awards | | | Option Awards | | | Stock Awards | | Name (a) | | Number of Shares
Acquired on Exercise (#)
(b) | | | Value Realized on
Exercise ($) (c) | | | Number of Shares
Acquired on Vesting1 (#) (d) | | | Value Realized on
Vesting1,2,3 ($) (e) | | | Number of
Shares
Acquired on
Exercise (#) (b) | | | Value
Realized on
Exercise ($) (c) | | | Number of
Shares
Acquired on
Vesting1 (#) (d) | | | Value
Realized on
Vesting1,2,3 ($) (e) | | Mr. McAdam | | | 0 | | | | 0 | | | | 228,801 | | | | 12,110,443 | | | | | | | Mr. Vestberg | | | | 0 | | | | 0 | | | | 102,548 | | | | 6,154,875 | | | | | | Mr. Ellis | | | 0 | | | | 0 | | | | 34,040 | | | | 1,751,939 | | | | 0 | | | | 0 | | | | 82,192 | | | | 4,919,673 | | Mr. Stratton | | | 0 | | | | 0 | | | | 87,589 | | | | 4,636,082 | | | Mr. Vestberg | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | Ms. Walden | | | 0 | | | | 0 | | | | 83,418 | | | | 4,415,317 | | | | | | | Mr. Dunne | | | | 0 | | | | 0 | | | | 116,911 | | | | 7,013,707 | | | | | | Ms. Erwin | | | | 0 | | | | 0 | | | | 62,145 | | | | 3,723,345 | | | | | | Mr. Gowrappan | | | | 0 | | | | 0 | | | | 37,901 | | | | 2,213,407 | | | | | |
| 1 | The amounts include dividend equivalents that were credited on the PSU and RSU awards that vested on December 31, 20172019 in accordance with the terms of the awards. For Mr. Ellis, the amountThe amounts also includesinclude dividend equivalents that were credited on the RSU awardawards that vested on FebruaryMarch 3, 2017, in accordance with2019 and March 6, 2019, as well as the terms ofRSU award for Mr. Vestberg that vested on April 3, 2019, the award.RSU award for Mr. Gowrappan that vested on April 9, 2019 and the RSU award for Mr. Dunne that vested on September 19, 2019. |
| 2 | TheFor Messrs. Vestberg, Ellis, Dunne, and Ms. Erwin, the amounts in this column representinclude the number of shares acquired on vesting of their 2017 annual PSU awards multiplied by $52.93,$61.40, the closing price of Verizon’s common stock on December 29, 2017.31, 2019. For all named executive officers except Mr. Vestberg and Mr. Gowrappan, the amounts in this column include the number of shares acquired on vesting of the second tranche of their 2017 annual RSU award that vested on March 3, 2019, multiplied by $56.96, the closing price of Verizon’s common stock on March 3, 2019. For all named executive officers except Mr. Gowrappan, the amounts in this column include the number of shares acquired on vesting of the first tranche of their 2018 annual RSU award that vested on March 6, 2019, multiplied by $55.68, the closing price of Verizon’s common stock on March 6, 2019. For Mr. EllisVestberg the amount includes the number of shares acquired on vesting of the second tranche of his 2017 annual RSU award multiplied by $58.87, the closing price of Verizon’s common stock on April 3, 2019. For Mr. Gowrappan the amount includes the number of shares acquired on vesting of the first tranche of his 2018 RSU award multiplied by $58.40, the closing price of Verizon’s common stock on April 9, 2019. For Mr. Dunne the amount also includes the number of shares acquired on vesting of the third tranche of his special 20142016 annual RSU award multiplied by $48.58,$59.98, the closing price of Verizon’s common stock on February 3, 2017.September 19, 2019. |
| 3 | The amounts in this column include $179,391$623,588 and $1,143,241 for Mr.Messrs. Ellis and Dunne, respectively, that was deferred under the Verizon Executive Deferral Plan in 2018 when the amounts would have otherwise been paid. |
Pension plans Mr. McAdamVerizon froze all future pension accruals under its managementtax-qualified and nonqualified defined benefit pension plans in 2006. None of the named executive officers other than Ms. Walden are bothErwin is eligible for a frozen pension benefit under a Verizon Wireless defined benefit retirement plan. All accruals under this plan(tax-qualified and nonqualified) were frozen as of December 31, 2006.benefit.
Verizon Wireless Retirement Plan component of the Verizon Management Pension Plan. In 2001, Verizon Wireless consolidated the pension plans of several predecessor companies under the Verizon Wireless Retirement Plan. Mr. McAdamEffective December 31, 2017, Verizon merged the Verizon Wireless Retirement Plan into the Verizon Management Pension Plan (VMPP) and established it as a separate component plan within the VMPP. Ms. Erwin is entitled to both aa tax-qualified and a nonqualified pension benefit under this plan, and plan. Ms. Walden is entitled to aErwin’stax-qualified benefit under this plan. Mr. McAdam’stax-qualified pension benefit was determined under two formulas: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 participant’s account balance is also credited on an ongoing basis with interest credits based upon the30-year Treasury bond); and (ii) the formula applicable to former US West employees, which is a final average pay formula based on 2411.25 years of service multiplied by 1.45%(a) 1.25% of Mr. McAdam’sMs. Erwin’s average annual eligible pay for the five final consecutive years for each year of service through the end of 2006.2006 up to the IRS Covered Compensation level in effect for 2006, the year the plan was frozen, plus (b) 1.50% of Ms. Erwin’s average annual eligible pay for the five final consecutive years for each year of service through the end of 2006 in excess of the IRS Covered Compensation level in effect for 2006, the year the plan was frozen. The compensation used for this purpose was limited by IRS compensation limits in effect for each applicable year. 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. McAdamMs. Erwin is eligible for unreduced early retirement benefits under the plan. Mr. McAdam’splan upon separation from the Company. Ms. Erwin’s nonqualified plan benefit
Verizon 2020 Proxy Statement 43
Compensation Tables Defined contribution savings plans was determined using the 1.45%1.50% final average pay formula and was calculated based on 1011.25 years of service and only included hisher 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,Ms. Erwin, 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 participant’s account balance is also credited on an ongoing basis with interest credits based upon the30-year Treasury bond).
| | | 50 | | |Verizon 2018 Proxy Statement |
Compensation Tables |Pension plans
The following table illustrates the actuarial present value as of December 31, 20172019 of pension benefits accumulated by Ms. Erwin, the only named executive officers, other than Messrs. Ellis, Stratton, and Vestbergofficer who are notis eligible for pension benefits. Pension benefitsBenefits | | | | | | | | | | | | | | | Name (a) | | Plan Name (b) | | Number of Years
Credited
Service1 (#) (c) | | | Present Value of
Accumulated
Benefit2 ($) (d) | | | Payments During
Last Fiscal Year ($) (e) | | Mr. McAdam | | Verizon Wireless Retirement Plan – Qualified Verizon Wireless Retirement Plan – Nonqualified | |
| 34
10 |
| |
| 1,068,915
1,604,642 |
| |
| 0
0 |
| Ms. Walden | | Verizon Wireless Retirement Plan – Qualified | | | 17 | | | | 27,619 | | | | 0 | |
| | | | | | | | | | | | | | | Name (a) | | Plan Name (b) | | Number of Years
Credited Service (#) (c) | | | Present Value of
Accumulated
Benefit1 ($) (d) | | | Payments During
Last Fiscal Year ($) (e) | | Ms. Erwin | | Verizon Wireless Retirement Plan — Qualified | | | 32 | | | | 628,896 | | | | 0 | | | | | Verizon Wireless Retirement Plan — Nonqualified | | | 32 | | | | 387,835 | | | | 0 | |
| 1 | The years of credited service for each of Mr. McAdam and Ms. Walden with respect to the applicable plan is less than the named executive officer’s 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. |
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 1011 to the Company’s consolidated financial statements for the year ended December 31, 2017,2019, as included in Verizon’s 20172019 Annual Report. However, in accordance with the requirements for this table, the values are calculated using the executive’s retirement at the earliest age at which he or she can retire without having the retirement benefit reduced under the plan. |
Defined contribution savings plans The named executive officers other than Mr. Vestberg, are participants in the Company’stax-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 who participate in these plans are subject to the same terms as other participants in these plans. During 2017, Mr. Vestberg was employed in Sweden and participated in thetax-qualified defined contribution savings plan (referred to as the “ITP1”) applicable to the company’s employees located in Sweden on the same terms as the other participants in that plan. Under the Savings Plan, participantsexecutives 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. Prior to 2018, participants were permitted to defer certain long-term incentive awards under the Deferral Plan (those deferrals were not eligible for Company match). Deferrals of long-term incentive awards arewere no longer permitted after 2017. Long-term incentive awards deferred prior to 2018 remain subject to the terms of the award and the applicable deferral election. ParticipantsFor 2019, participants in the Savings Plan and the Deferral Plan arewere 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 usesused the same criteria it usesused to determine the Short-Term Plan award paid to employees. For 2017,2019, the discretionary contribution was 1.50%2.25%. Messrs. McAdam and Stratton and Ms. Walden were participants in the Verizon Wireless Executive Deferral Plan while they were employed at Verizon Wireless. In April 2014, following Verizon’s 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 the hypothetical investment options available to all participants under the Savings Plan or in a hypothetical cash account that earns a return rate equal to the long-term, high-grade corporate bond yield average as published by Moody’s Investor Services. Under SEC rules, earnings on balances invested in this option may be reportable as “above market” interest in the Summary Compensation table of the proxy statement in any given year if the rate of interest exceeds 120% of the applicable federal long-term rate at the time the plan interest rate or formula was originally established. 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. | | | Verizon 2018 Proxy Statement| | | 51 |
44Verizon 2020 Proxy Statement
Compensation Tables|Defined contribution savings plans Potential payments upon termination or change in control Messrs. McAdam and Stratton and
Ms. WaldenErwin also havehas an account balancesbalance 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. ITP1 is a collectively agreed defined contribution plan. The annual employer contributions are as follows:
4.5% of a participant’s gross earnings below 7.5 times the Income Base Amounts (IBA)
30.0% of a participant’s gross earnings above 7.5 times the IBA.
The IBA is an index established by the Swedish government that increases annually in line with wages. In 2017, the IBA was SEK 61,500.
The “Nonqualified deferred compensation”Nonqualified Deferred Compensation table below shows the 20172019 account activity for each named executive officer other than Mr. Vestberg and includes each participating executive’s contributions, Company matching contributions, earnings, withdrawals and distributions and the aggregate balance of his or her total deferral account as of December 31, 2017. Mr. Vestberg did not participate in a nonqualified deferred compensation plan during 2017.2019.
Nonqualified deferred compensationDeferred Compensation | | | | | | | | | | | | | | | | | | | | | | | Name (a) | | | | Executive
Contributions
in Last FY1
($) (b) | | | Registrant
Contributions
in Last FY2
($) (c) | | | Aggregate
Earnings
in Last
FY3 ($) (d) | | | Aggregate
Withdrawals/
Distributions4 ($) (e) | | | Aggregate Balance
at Last FYE4 ($) (f) | | Mr. McAdam | | Verizon Executive Deferral Plan | | | 271,800 | | | | 325,150 | | | | 468,720 | | | | 0 | | | | 10,571,389 | | | | | Verizon Wireless Executive Savings Plan | | | 0 | | | | 0 | | | | 123,554 | | | | 0 | | | | 2,604,480 | | Mr. Ellis | | Verizon Executive Deferral Plan | | | 236,354 | | | | 58,998 | | | | 23,681 | | | | 0 | | | | 544,195 | | Mr. Stratton | | Verizon Executive Deferral Plan | | | 438,077 | | | | 124,575 | | | | 906,653 | | | | 0 | | | | 10,186,227 | | | | | Verizon Wireless Executive Savings Plan | | | 0 | | | | 0 | | | | 177,866 | | | | 0 | | | | 4,473,100 | | Ms. Walden | | Verizon Executive Deferral Plan | | | 105,138 | | | | 124,575 | | | | 297,689 | | | | 0 | | | | 7,379,521 | | | | | Verizon Wireless Executive Savings Plan | | | 0 | | | | 0 | | | | 578 | | | | 0 | | | | 14,286 | |
| | | | | | | | | | | | | | | | | | | | | | | Name (a) | | | | Executive
Contributions
in Last FY1 ($) (b) | | | Registrant
Contributions
in Last FY2 ($) (c) | | | Aggregate
Earnings in
Last FY ($) (d) | | | Aggregate
Withdrawals/
Distributions3 ($) (e) | | | Aggregate
Balance at
Last FYE3 ($) (f) | | | | Mr. Vestberg | | Verizon Executive Deferral Plan | | | 238,335 | | | | 304,811 | | | | 47,228 | | | | 0 | | | | 711,738 | | | | Mr. Ellis | | Verizon Executive Deferral Plan | | | 437,811 | | | | 165,587 | | | | 105,316 | | | | 0 | | | | 1,759,981 | | | | Mr. Dunne | | Verizon Executive Deferral Plan | | | 290,742 | | | | 178,246 | | | | 80,247 | | | | 0 | | | | 1,207,613 | | | | Ms. Erwin | | Verizon Executive Deferral Plan | | | 111,818 | | | | 136,020 | | | | 147,187 | | | | 0 | | | | 3,094,882 | | | | Verizon Wireless Executive Savings Plan | | | 0 | | | | 0 | | | | 6,553 | | | | 0 | | | | 54,013 | | | | Mr. Gowrappan | | Verizon Executive Deferral Plan | | | 96,058 | | | | 105,911 | | | | 17,755 | | | | 0 | | | | 266,255 | | | |
| 1 | Of the amounts listed in this column, the following amounts are also included in the “Summary compensation”Summary Compensation table for 2019 in columns (c) and (j): for Mr. McAdam, $79,800;Vestberg, $73,200; for Mr. Ellis, $28,338;$40,200; for Mr. Stratton, $168,077;Dunne, $43,200; for Ms. Erwin, $45,600 and for Ms. Walden, $40,338.Mr. Gowrappan, $34,858. |
| 2 | The amounts listed in this column are also included in columns (i) and (j) of the “Summary compensation”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, $73,949; for Mr. Ellis, $2,998; for Mr. Stratton, $80,190; and for Ms. Walden, $40,381. |
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”Summary Compensation table in Verizon’s previous proxy statements:for the following years: |
• For Mr. McAdam,Vestberg, a total of $5,470,490$280,381 was reported (2008(2018 to 2017)2019); • For Mr. Ellis, a total of $83,928$450,606 was reported (2017)(2017 to 2019); • For Mr. Stratton,Dunne, a total of $2,873,722$247,243 was reported (2013 to 2017)(2019); and • For Ms. Walden,Mr. Gowrappan, a total of $478,966$105,866 was reported (2016 to 2017)(2019). 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 other than Ms. Walden if a termination of employment or change in control of Verizon had occurred at the end of 20172019 under Verizon’s compensation plans and agreements. Ms. Walden left Verizon on February 28, 2018. The actual payments and benefits that Ms. Walden became entitled to receive in connection with her separation from Verizon are discussed under the heading “Separation of Ms. Walden” beginning on page 57. | | | 52 | | |Verizon 2018 Proxy Statement |
Compensation Tables |Potential payments upon termination or change in control
Payments made upon termination Regardless of the manner in which a named executive officer’s 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”Pension Benefits and “Nonqualified deferred compensation”Nonqualified Deferred Compensation tables above. Those benefits are not included in the summaries and tables below. In addition, amounts earned under our 20172019 Short-Term Plan awards and amounts earned under our 2015 Long-Term Plan awards that vested on December 31, 2019 are not included in the summaries or tables below. Amounts earned under our 20172019 Short-Term Plan awards are discussed in the Compensation Discussion and Analysis beginning on page 3328 and are reported in the “Summary compensation”Summary Compensation table on page 46.39. Amounts earned under our 2015 Long-Term Plan awards that vested on December 31, 2019 are discussed in the Compensation Discussion and Analysis beginning on page 4031 and are reported in the “Option exercisesOption Exercises and stock vested”Stock Vested table on page 50.43. If a named executive officer’s employment had terminated on December 31, 20172019 for any reason other than for cause, the full amount of the 20172019 Short-Term Plan award and the full amount of the 2015 Verizon 2020 Proxy Statement 45
Compensation Tables Potential payments upon termination or change in control Long-Term Plan awards that vested on December 31, 2019, 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.Vestberg. As Chairman and CEO, Mr. McAdamVestberg is not eligible to participate in the Senior Manager Severance Plan described below. Mr. McAdamVestberg 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 executive’s 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 Verizon’s 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) alump-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 executive’s 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 executive’s cash severance payment under the Senior Manager Severance Plan will be reduced on adollar-for-dollar basis by the amount of the severance benefits payable to the executive under such other agreement, plan or arrangement. Ms. Walden left Verizon on February 28, 2018. Upon her separation, Ms. Walden was entitled to receive separation benefits under the Senior Manager Severance Plan, which are described and quantified under the heading “Separation of Ms. Walden” beginning on page 57. Ms. Walden did not receive any additional separation benefits or payments upon her separation of service.
| | | Verizon 2018 Proxy Statement| | | 53 |
Compensation Tables |Potential payments upon termination or change in control
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 and Mr. Vestberg did not participate in the financial planning program in 2017 and, as a result, would not have been entitled to receive financial planning services if their employment had terminated on the last business day of 2017. 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 cash payment from Verizon to paydefray a portion of the annual premiumpremiums until the latest of the executive’s attainment of age 60 or the completion of 5 years of plan 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 cash payment to paydefray a portion of the annual premiumpremiums for the two years following the year in which the executive’s termination occurs. Mr. McAdam attainedIf the named executive officer is retirement eligible upon termination and has achieved plan maturity on December 31, 2014, and he isupon his or her termination, the executive would not be entitled to receive any additional cash payment from Verizon. 46Verizon 2020 Proxy Statement
Compensation Tables Potential payments from Verizon with respect to this benefit following hisupon termination of employment. In addition, Mr. Vestberg is eligible for a one month contribution to the ITP1 collectively agreed defined contribution plan.or change in control Estimated payments. The following table shows Verizon’s estimate of the amount of benefits the named executive officers other than Ms. Walden, would have been entitled to receive had their employment been involuntarily terminated without cause on the last business day of 20172019 or had they incurred a qualifying separation under the Senior Manager Severance Plan. The actual payments and benefits that Ms. Walden became entitled to receive upon her separation from Verizon on February 28, 2018 are discussed under the heading “Separation of Ms. Walden” beginning on page 57. | | Name | | Cash Separation
Payment ($) | | | Continued Health
Benefits1 ($) | | | Outplacement
Services ($) | | | Financial
Planning2
($) | | | Executive Life
Insurance Benefit3
($) | | | Other4
($) | | | Cash Separation
Payment ($) | | | Continued Health
Benefits1($) | | Outplacement
Services ($) | | Financial
Planning2 ($) | | Executive Life
Insurance Benefit3 ($) | | Mr. McAdam | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | | | | Mr. Vestberg | | | | 0 | | | 0 | | 0 | | 0 | | | 0 | | Mr. Ellis | | | 3,750,000 | | | | 43,667 | | | | 14,500 | | | | 11,000 | | | | 20,053 | | | | 0 | | | | 4,750,000 | | | 48,291 | | 14,500 | | 13,000 | | | 30,339 | | Mr. Stratton | | | 4,750,000 | | | | 29,112 | | | | 14,500 | | | | 13,000 | | | | 153,666 | | | | 0 | | | Mr. Vestberg | | | 4,500,000 | | | | 0 | | | | 14,500 | | | | 0 | | | | 4 | | | | 26,913 | | | Mr. Dunne | | | | 5,000,000 | | | 48,291 | | 14,500 | | 17,155 | | | 137,126 | | Ms. Erwin | | | | 4,250,000 | | | 32,196 | | 14,500 | | 11,000 | | | 265,269 | | Mr. Gowrappan | | | | 4,250,000 | | | 16,097 | | 14,500 | | 0 | | | 0 | |
| 1 | The amounts reflect Verizon’s estimated cost of providing medical, dental and vision coverage for two years. Upon a termination of Mr. Vestberg’s employment, he would have been entitled to continued healthcare coverage under the Swedish Universal Healthcare system at no cost to the company. |
| 2 | Mr. McAdam and Mr. VestbergGowrappan did not participate in the financial planning program in 20172019 and, as a result, would not have been entitled to receive financial planning services if theirhis employment had terminated on the last business day of 2017.2019. |
| 3 | If Mr. McAdam had retired on December 31, 2017, 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. The amount for Mr. Stratton represents the amount of total payments to pay a portion of the life insurance policy owned by him, provided that he continues to pay the annual premium pursuant to the terms of the program. The amount for Mr.Messrs. Ellis and Dunne, who isare not retirement eligible, reflects one additional annual cash payment to paydefray a portion of the annual premium for the two years following the year in which histheir termination occurs. The amount for Ms. Erwin, who is retirement eligible, reflects the value of the future annual cash payments from Verizon used to defray a portion of the annual premiums until her attainment of age 60. Mr. VestbergGowrappan did not participate in the program in 2017. However, the amount shown represents a one month required contribution to the TGL life insurance program, which is described in footnote 1 to the “Estimated Payments” table below under the heading “Potential payments upon death, disability or retirement.” The amounts were converted from SEK to USD in the above table using the December 29, 2017 USD to SEK exchange rate (8.20760 SEK = 1 USD). |
2019. 4 | For Mr. Vestberg, this column includes a one month contribution to the ITP1 collectively agreed defined contribution plan. The amounts were converted from SEK to USD in the above table using the December 29, 2017 USD to SEK exchange rate (8.20760 SEK = 1 USD). |
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 paydefray a portion of the annual premium until the latest of the executive’s 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. | | | 54 | | |Verizon 2018 Proxy Statement |
Compensation Tables |Potential payments upon termination or change in control
Under the Short-Term Plan, if the named executive officer’s 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 executive’s 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 thetax-qualified and nonqualified disability plans. Verizon 2020 Proxy Statement 47
Compensation Tables Potential payments upon termination or change in control Estimated payments. The following table shows Verizon’s estimate of the amount of benefits the named executive officers other than Ms. Walden, would have been entitled to receive had their employment terminated due to death, disability or qualifying retirement on the last business day of 2017. The actual payments and benefits that Ms. Walden became entitled to receive upon her separation from Verizon on February 28, 2018 are discussed under the heading “Separation of Ms. Walden” beginning on page 57.2019. | Name | | Executive Life Insurance Benefit1
($) | | | Disability Benefit2
($) | | | Financial Planning3 ($) | | | Executive Life Insurance Benefit1 ($) | | | Disability Benefit2 ($) | | | Financial Planning3 ($) | | Mr. McAdam | | | | | | | | Mr. Vestberg | | | | | | | | Death | | | 3,200,000 | | | | 0 | | | | 0 | | | | 10,000,000 | | | | 0 | | | | 25,275 | | Disability | | | 0 | | | | 784,032 | | | | 0 | | | | 674,865 | | | | 1,983,484 | | | | 25,275 | | Retirement | | | 0 | | | | 0 | | | | 0 | | | Retirement4 | | | | 0 | | | | 0 | | | | 0 | | Mr. Ellis | | | | | | | | | | | | | Death | | | 3,008,000 | | | | 0 | | | | 11,000 | | | | 3,810,000 | | | | 0 | | | | 13,000 | | Disability | | | 278,766 | | | | 503,217 | | | | 11,000 | | | | 318,973 | | | | 1,945,816 | | | | 13,000 | | Retirement4 | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | Mr. Stratton | | | | | | | | Mr. Dunne | | | | | | | | Death | | | | 10,000,000 | | | | 0 | | | | 17,155 | | Disability | | | | 416,570 | | | | 1,861,570 | | | | 17,155 | | Retirement4 | | | | 0 | | | | 0 | | | | 0 | | Ms. Erwin | | | | | | | | Death | | | 3,810,000 | | | | 0 | | | | 13,000 | | | | 8,525,000 | | | | 0 | | | | 11,000 | | Disability | | | 153,666 | | | | 374,229 | | | | 13,000 | | | | 265,269 | | | | 1,323,677 | | | | 11,000 | | Retirement | | | 153,666 | | | | 0 | | | | 13,000 | | | | 265,269 | | | | 0 | | | | 11,000 | | Mr. Vestberg | | | | | | | | Mr. Gowrappan | | | | | | | | Death | | | 51,903 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | Disability | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 2,036,653 | | | | 0 | | Retirement4 | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | |
| 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, for the named executive officers other than Mr. Vestberg,Gowrappan, the amount, if any, represents the total amount of annual cash payments to the named executive officer to paydefray a portion of the annual premium of the life insurance policy owned by him or her, provided that the named executive officer continues to pay the annual premiums pursuant to the terms of the executive life insurance program. The amount shown for Mr. Vestberg represents the company paid portion of the premium under the TGL life insurance plan, which is a collectively agreed group life insurance program for employees in Sweden that offers a basic benefit of 6 times the Price Base Amount (PBA) if under age 55. The benefit amount increases at older ages and there is a supplement payable for minor aged children. The PBA is an index established by the Swedish government that increases annually in line with wages. In 2017, the PBA was SEK 44,800. The amount shown for Mr. Vestberg was converted from SEK to USD in the above table using the December 29, 2017 USD to SEK exchange rate (8.20760 SEK = 1 USD). If Mr. McAdam had retired on December 31, 2017, 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. |
| | | Verizon 2018 Proxy Statement| | | 55 |
Compensation Tables |Potential payments upon termination or change in control
| 2 | Assumes that each named executive officer other than Mr. Vestberg, would be immediately eligible for long-term disability benefits from Verizon’s 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 3.80%4.20% and mortality and recovery based on the 2012 Group Long-Term Disability Valuation 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.Messrs. Vestberg, Ellis, Dunne, and Mr. Stratton,Gowrappan and Ms. Erwin, is estimated at $285,429, $503,217,$881,549, $661,348, $827,365, $792,220 and $374,229,$450,783, respectively, and the nonqualified portion of the disability benefit for Mr. McAdamMessrs. Vestberg, Ellis, Dunne, and Gowrappan and Ms. Erwin, is estimated at $498,602.$1,101,936, $1,284,469, $1,034,206, $1,244,432 and $872,894. 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. During 2017, Mr. Vestberg participated in a broad-basednon-discriminatory long-term disability plan for Verizon employees located in Sweden on the same terms and conditions that apply to all other participants in that plan. |
| 3 | Mr. McAdam and Mr. VestbergGowrappan did not participate in the financial planning program in 20172019 and, as a result, would not have been entitled to receive financial planning services if theirhis employment had terminated on the last business day of 2017.2019. |
| 4 | Mr.Messrs. Vestberg, Ellis and Dunne would not have been entitled to receive executive life insurance benefits or financial planning benefits because hethey had not fulfilled the eligibility requirements for retirement under the terms of those programs on the last business day of 2017.2019. Mr. VestbergGowrappan would also not have been entitled to receive these benefits because he did not participate in those plans. |
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 officer’s 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 officer’s then unvested RSUs will vest and be payable on the regularly scheduled payment date after the end of the applicable award cycledates and each named executive officer’s 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 Verizontax-qualified savings plan) and a combination of age and years of vesting service that equals or exceeds 75. As of December 31, 2017, Messrs. McAdam and Stratton were2019, Ms. Erwin was retirement-eligible under the Long-Term Plan. 48Verizon 2020 Proxy Statement
Compensation Tables Potential payments upon termination or change in control 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 participant’s 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 Verizon’s 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 participant’s 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 cycledates 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 Verizon’s 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. | | | 56 | | |Verizon 2018 Proxy Statement |
Compensation Tables |Potential payments upon termination or change in control
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 leastone-half of the board of directors of the surviving corporation; Verizon’s CEO is the CEO of the surviving corporation; and The headquarters of the surviving corporation is located in New York, New York. Estimated payments. The following table shows the estimated value of the awards that the named executive officers other than Ms. Walden, could have received in respect of their outstanding unvested equity awards if any of the following events, which would trigger accelerated vesting of the awards, occurred on the last business day of 2017:2019: (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; andcause within 12 months; (iii) a termination of employment as a result of an involuntary termination without cause (other than in connection with a change in control); (iv) a qualifying retirement,retirement; or (v) death or disability. The amounts represent the estimated value of the outstanding RSU and PSU awards granted in 20162017, 2018 and 2017,2019, including the incremental award granted to Mr. Ellis in 2016 in connection with his promotion, and the estimated value of the PSU award granted to Mr. Stratton in 2017 and theadditional RSU award granted to Mr. Vestberg in 2017 and the special PSU award granted to him in 2018, the 2017 PRSU award granted to Mr. Dunne and Ms. Erwin, and the 2018 PRSU award granted to Mr. Gowrappan 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 20172019 and $52.93,$61.40, Verizon’s closing stock price on that date, and for the PSUs and the PRSUs, assuming the award would vest at target performance levels. The actual amount payable under these awards can be determined only at the time the awards would be paid. The actual payments and benefits that Ms. Walden became entitled to receive upon her separation from Verizon on February 28, 2018 are discussed under the heading “Separation of Ms. Walden” below. | | Name | | Change In Control
Without Termination
($) | | | Change In Control
And Termination
Without Cause ($) | | | Termination
Without Cause
($) | | | Retirement1
($) | | | Death or
Disability
($) | | | Change In Control
Without
Termination ($) | | Change In
Control And
Termination
Without Cause ($) | | Termination
Without Cause ($) | | Retirement1($) | | Death or Disability ($) | Mr. McAdam | | | 0 | | | | 26,454,838 | | | | 26,454,838 | | | | 26,454,838 | | | | 26,454,838 | | | Mr. Vestberg | | | 0 | | 39,062,495 | | 39,062,495 | | 0 | | 39,062,495 | Mr. Ellis | | | 0 | | | | 6,024,492 | | | | 6,024,492 | | | | 0 | | | | 6,024,492 | | | 0 | | 12,724,107 | | 12,724,107 | | 0 | | 12,724,107 | Mr. Stratton | | | 0 | | | | 17,377,607 | | | | 17,377,607 | | | | 10,704,404 | | | | 17,377,607 | | | Mr. Vestberg | | | 0 | | | | 8,568,362 | | | | 8,568,362 | | | | 0 | | | | 8,568,362 | | | Mr. Dunne | | | 0 | | 15,141,546 | | 15,141,546 | | 0 | | 15,141,546 | Ms. Erwin | | | 0 | | 12,873,245 | | 12,873,245 | | 12,873,245 | | 12,873,245 | Mr. Gowrappan | | | 0 | | 14,759,209 | | 14,759,209 | | 0 | | 14,759,209 |
| 1 | Mr.Messrs. Vestberg, Ellis, Dunne and Mr. VestbergGowrappan would not have been entitled to receive any amount in respect of their outstanding unvested equity awards upon retirement because they had not met the eligibility requirements for retirement under the terms of the Long-Term Plan on the last business day of 2017. |
Separation of Ms. Walden2019.
In connection with Ms. Walden’s separation from service on February 28, 2018, she became entitled to separation benefits under the terms and conditions of the Senior Manager Severance Plan. The following table sets forth the payments and benefits Ms. Walden became entitled to receive upon her separation.
| | | | | | | | | | | | | | | | | | | Cash Separation Payment1
($) | | | Continued Health Benefits2
($) | | | Equity3 ($) | | | Financial Planning
($) | | | Executive Life Insurance Benefit4
($) | | | | | | | | 4,764,500 | | | | 46,459 | | | | 10,194,636 | | | | 13,000 | | | | 45,995 | |
1 | Represents the cash severance benefit payable under the Senior Manager Severance Plan ($4,750,000) and a cash payment in lieu of outplacement services ($14,500). |
2 | Represents Verizon’s estimated cost of providing medical, dental and vision coverage for two years. |
Verizon 2020 Proxy Statement 49 3 | Represents the estimated value of the RSU and PSU awards granted in 2016 and 2017. The value of these awards was calculated using the total number of units (including accrued dividends) on the last business day of 2017 and $52.93, Verizon’s 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. |
4 | Represents one additional payment to pay a portion of the annual premium for the two years following Ms. Walden’s separation from Verizon for the life insurance policy owned by her. |
| | | Verizon 2018 Proxy Statement| | | 57 |
Compensation Tables |Separation of Ms. Walden
Ms. Walden 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 her separation, agreed not to compete or interfere with any Verizon business for a period of one year after termination from employment, and always to protect Verizon’s trade secrets and proprietary information.
CEO pay ratio disclosure Pursuant to SEC rules, we are required to disclose in this proxy statement the ratio of the annual total compensation of Mr. McAdam, our Chairman and CEO to the median of the annual total compensation of all of our employees (excluding Mr. McAdam)the CEO). We determined that Mr. McAdam’s 2017 annualthe annualized total compensation of Mr. Vestberg was $17,947,316,$18,111,823, the median of the 20172019 annual total compensation of all of our employees (excluding Mr. McAdam)Vestberg) was $126,623,$172,971, and the ratio of these amounts was 142105 to 1. For purposes of calculating the ratio, the value of employer provided benefits undernon-discriminatory health plans was included in the compensation of each of Mr. Vestberg and the median employee. As required by SEC rules, the calculation of annual total compensation for both the CEO and the median employee includes a change in pension value during the year. The change in pension value is subject to several external variables, including interest rates that are not related to company or individual performance and may differ significantly based on the formula under which the benefits were earned. The change in pension value for the median employee was $53,098 during the year, which was largely driven by a significant decrease in the interest rates year over year used to measure the pension benefit for this purpose. Because Mr. Vestberg does not have a pension benefit, we note that if we eliminated the change in pension value from our median employee’s 2019 annual total compensation, the median employee’s annual total compensation would have been $119,873 and our CEO to median employee pay ratio would have been 151 to 1. To identify the “median employee” for purposes of this disclosure (i.e., the individual employee whose compensation was at the median level among our entire employee group), we used a determination date of October 1, 20172019 and analyzed, for all of the individuals employed by us or any of our consolidated subsidiaries on that date, the compensation that we paid to each of those individuals for the12-month period ending on that date. We considered each employee’s “compensation” to consist of (i) the employee’s total gross earnings for the12-month period ending October 1, 2017,2019, plus (ii) the estimated amount of Verizon’s contributions for that period to the retirement plans in which the employee participates, plus (iii) the estimated present value of the employee’s accrual under a Verizon pension plan (if any) for those who are still accruing service and whose benefits have not otherwise been frozen. The compensation for employees, other than temporary and seasonal employees, who were not employed by us for the entire12-month period was annualized to reflect compensation for the entire12-month period. For purposes 50Verizon 2020 Proxy Statement
Audit Matters Item 3: Ratification of calculatingAppointment of Independent Registered Public Accounting Firm The Audit Committee considered the ratio above,performance and qualifications of Ernst & Young LLP, and has reappointed that independent registered public accounting firm to examine the valuefinancial statements of employer providednon-discriminatory health benefits was included inVerizon for fiscal year 2020 and to examine the compensationeffectiveness of each of Mr. McAdaminternal control over financial reporting. Ernst & Young has been retained as Verizon’s independent registered public accounting firm since 2000. Verizon paid the following fees to Ernst & Young for services rendered during fiscal years 2019 and the median employee.2018. | | | | | | | | | | | | | | | | | 58 | | Audit fees | | | |Audit-
related feesVerizon
| | | Tax fees | | | All other fees | | 2019 | | | $39.0 million | | | | $ 8.0 million | | | | $3.9 million | | | | — | | 2018 Proxy Statement | | | $35.5 million | | | | $10.3 million | | | | $4.4 million | | | | — | |
Audit fees are attributable to services that include the financial statement audit, the audit of the effectiveness of Verizon’s internal control over financial reporting required by the Sarbanes-Oxley Act, and financial statement audits required by statute for our foreign subsidiaries. Audit-related fees are attributable to services that primarily include audits of other subsidiaries, reviews of controls over services provided to customers, work related to the implementation of new accounting standards, and agreed upon procedures with respect to sustainability reporting, as well as other audit and due diligence procedures performed in connection with acquisitions, dispositions or other financial transactions. Tax fees are attributable to services that primarily consist of federal, state, local and international tax planning and compliance. The Audit Committee considered, in consultation with management and the independent registered public accounting firm, whether Ernst & Young 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 & Young’s appointment for the 2020 fiscal year, the Committee reviewed the firm’s qualifications and competencies, including the following factors: Ernst & Young’s historical performance and its recent performance during its engagement for the 2019 fiscal year; Ernst & Young’s capability and expertise in handling the breadth and complexity of Verizon’s operations; the qualifications and experience of key members of the engagement team, including the lead engagement partner, for the audit of Verizon’s financial statements; the quality of Ernst & Young’s communications with the Committee regarding the conduct of the audit, and with management with respect to issues identified in the audit; external data on audit quality and performance of, including recent Public Company Accounting Oversight Board reports on, Ernst & Young; the appropriateness of Ernst & Young’s fees for audit andnon-audit services, on both an absolute basis and as compared to its peer firms; and Ernst & Young’s 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 & Young’s personnel occurs routinely and is directly involved in the selection of Ernst & Young’s lead engagement partner. Verizon 2020 Proxy Statement 51
Audit Matters Item 3: Advisory VoteRatification of Appointment of Independent Registered Public Accounting Firm The Committee has established policies and procedures regardingpre-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 Committeepre-approves the engagement of the independent registered public accounting firm to Approve Executive Compensation Shareholders have strongly supported Verizon’s executive compensation program since our first annual advisory voteprovide audit services based on fee estimates. The Committee alsopre-approves proposed audit-related services, tax services and other permissible services based on specified project and service details, fee estimates, and aggregate fee limits. The Committee receives a report at each meeting on the matter in 2009. We are asking youstatus of services provided or to be provided by the independent registered public accounting firm and approves the related fees. The Committeepre-approved all of Ernst & Young’s 2019 fees and services.
The affirmative vote in favorof a majority of the followingnon-binding resolution: “Resolved,shares cast at the annual meeting is required to ratify the reappointment of Ernst & Young for the 2020 fiscal year. The Committee believes that continuing to retain Ernst & Young to serve as Verizon’s independent registered public accounting firm is in the best interests of Verizon and our shareholders. If this appointment is not ratified by the shareholders, approve, on an advisory basis, the compensationCommittee will reconsider its decision. One or more representatives of Ernst & Young will be at the named executive officers, as disclosed in Verizon’s proxy statement for the 20182020 Annual Meeting of Shareholders, pursuantin person or by telephone. They will have an opportunity to the compensation disclosure rules of the Securitiesmake a statement 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 2017 is substantially the same as it was last year. Our Board recommends a vote FOR this resolution because the Board believes our program effectively:
Encourages strong short-term and long-term performance;
Aligns the executives’ long-term interests with those of our shareholders; and
Retains high-performing executives.
In the Compensation Discussion and Analysis and Compensation Tables beginning on page 26, we provide a detailed description of our executive compensation program, including our philosophy, the elements of our program and the compensation of our named executive officers. We encourage youwill be available to read these sections before deciding howrespond 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 annualsay-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.appropriate questions.
| | | | | | |  | | | | OurThe Board of Directors recommends that you voteforFOR this proposal. ratification.
| | | | | | |
52Verizon 2020 Proxy Statement | | | Verizon 2018 Proxy Statement| | | 59 |
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 Verizon’s audited financial statements for the year ended December 31, 2019, and the effectiveness of Verizon’s internal control over financial reporting as of December 31, 2019. 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 Public Company Accounting Oversight Board Auditing Standard No. 1301,Communications with Audit Committees. 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 Verizon’s internal controls and the overall quality of Verizon’s financial reporting. The Committee has assessed and discussed with management Verizon’s significant business risk exposures and overseen management’s programs and policies to monitor, assess and manage such exposures. 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 Verizon’s Annual Report on Form10-K for the year ended December 31, 2019. The Committee reviewed the independent registered public accounting firm’s performance, qualifications and tenure, the qualifications of the lead engagement partner, management’s recommendation regarding retention of the firm, and considerations related to audit firm rotation, as discussed further on page 51. Based on that review, the Committee reappointed the independent registered public accounting firm for fiscal year 2020. Respectfully submitted, The Audit Committee Gregory Weaver, Chair Shellye Archambeau Clarence Otis, Jr. Kathryn Tesija February 20, 2020 Verizon 2020 Proxy Statement 53
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 2017.
Security Ownership of Certain Beneficial Owners and Management Principal shareholdersShareholders On March 5, 2018,9, 2020, there were approximately 4.134.14 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 | | | Amount and nature of beneficial ownership | | | Percent of class | | The Vanguard Group1 | | | | | | | | | 100 Vanguard Blvd. | | | | | | | | | Malvern, Pennsylvania 19355 | | | 290,162,326 | | | | 7.1% | | | | 328,323,017 | | | | 7.9% | | BlackRock, Inc.2 | | | | | | | | | 55 East 52nd Street | | | | | | | | | New York, New York 10055 | | | 265,904,767 | | | | 6.5% | | | | 317,231,674 | | | | 7.7% | |
| 1 | This information is based on a Schedule 13G filed with the SEC on February 9, 201812, 2020 by The Vanguard Group, setting forth information as of December 31, 2017.2019. The Schedule 13G states that The Vanguard Group has sole voting power with respect to 5,784,1786,141,837 shares, shared voting power with respect to 904,9681,239,300 shares, sole dispositive power with respect to 283,622,128321,318,950 shares, and shared dispositive power with respect to 6,540,1987,004,067 shares. |
| 2 | This information is based on a Schedule 13G filed with the SEC on January 23, 2018February 6, 2020 by BlackRock, Inc., setting forth information as of December 31, 2017.2019. The Schedule 13G states that BlackRock, Inc. has sole voting power with respect to 229,947,477275,867,808 shares, shared voting power with respect to 0 shares, sole dispositive power with respect to 265,904,768317,231,674 shares, and shared dispositive power with respect to 0 shares. |
| | | 60 | | |Verizon 2018 Proxy Statement |
54Verizon 2020 Proxy Statement
Stock Ownership|Directors Security Ownership of Certain Beneficial Owners and executive officersManagement Directors and executive officersExecutive 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, 2018.February 28, 2020. This information includes shares held in Verizon’s 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 interestexposure that the executive officers and Directors have into Verizon common stock. | Name | | Stock1,2 | | | Total stock-based holdings3 | | | Stock1 | | | Total stock-based holdings2 | | Named Executive Officers | | | | | | | | | Lowell McAdam* | | | 671,281 | | | | 1,411,892 | | | Hans Vestberg* | | | | 85,698 | | | | 676,647 | | Matthew Ellis | | | 37,021 | | | | 164,175 | | | | 85,926 | | | | 266,762 | | John Stratton | | | 137,114 | | | | 567,588 | | | Marni Walden | | | 81,170 | | | | 322,428 | | | Hans Vestberg | | | 0 | | | | 161,935 | | | Ronan Dunne | | | | 70,834 | | | | 290,571 | | Tami Erwin | | | | 72,096 | | | | 261,639 | | K. Guru Gowrappan | | | | 52,078 | | | | 246,831 | | Directors | | | | | | | | | Shellye Archambeau | | | 0 | | | | 17,976 | | | | 0 | | | | 26,977 | | Mark Bertolini | | | 0 | | | | 13,406 | | | | 225 | | | | 22,158 | | Richard Carrión | | | 5,162 | | | | 123,896 | | | Richard Carrión** | | | | 474 | | | | 33,879 | | Vittorio Colao | | | | 0 | | | | 5,209 | | Melanie Healey | | | 0 | | | | 27,285 | | | | 0 | | | | 37,523 | | M. Frances Keeth | | | 0 | | | | 60,172 | | | Karl-Ludwig Kley | | | 0 | | | | 10,651 | | | M. Frances Keeth** | | | | 0 | | | | 0 | | Lowell McAdam** | | | | 490,693 | | | | 688,851 | | Clarence Otis, Jr. | | | 3,000 | | | | 71,090 | | | | 3,000 | | | | 85,296 | | Daniel Schulman | | | | 0 | | | | 7,572 | | Rodney Slater | | | 0 | | | | 38,239 | | | | 0 | | | | 49,345 | | Kathryn Tesija | | | 0 | | | | 22,049 | | | | 0 | | | | 31,473 | | Gregory Wasson | | | 0 | | | | 21,094 | | | Carol Tomé** | | | | 1,060 | | | | 4,092 | | Gregory Weaver | | | 0 | | | | 11,311 | | | | 0 | | | | 19,620 | | All of the above and other executive officers as a group4 | | | 1,050,291 | | | | 3,676,948 | | | All of the above and other executive officers as a group3 | | | | 530,442 | | | | 2,792,354 | |
| * | Mr. McAdamVestberg also serves as a Director. |
| ** | Mr. Carrión, Ms. Keeth and Mr. McAdam each served on the Board until May 2019. Ms. Tomé served on the Board from January 1 to March 12, 2020. |
| 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 as follows: 146,01963,117 shares for Mr. McAdam; 18,276Vestberg; 38,012 shares for Mr. Ellis; 43,21636,829 shares for Mr. Stratton; and 54,272Dunne; 31,344 shares for Ms. Walden.ForErwin; 52,078 shares for Mr. Carrión, the “Stock” column also includes 3,831Gowrappan; and 72,248 shares that may be acquired within 60 days pursuant to the conversion of certain stock units under a deferred compensation plan.for Mr. McAdam. Prior to conversion, the shares underlying the RSUs and deferred compensation units may not be voted or transferred. The amount in this column for Mr. Bertolini includes shares held by a foundation. No shares are pledged as security. |
| 2 | Ms. Walden’s holdings include 14,210 shares held by a trust with which she 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. |
43 | Does not include shares held by Mr. Carrión, Ms. Walden, who ceased to be an executive officer asKeeth or Mr. McAdam, each of December 31, 2017.whom served on the Board until May 2019 . |
| | | Verizon 2018 Proxy Statement| | | 61 |
Verizon 2020 Proxy Statement 55
Items 4 – 98 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. We have printed the proposals as they were submitted. 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, and the number of shares of Verizon’s common stock owned by, the proponents and anyco-sponsors are available upon written request to the Assistant Corporate Secretary at the address specified under “Contacting Verizon.Us.” Item 4: Nonqualified Savings Plan Earnings Above-Market Returns on Nonqualified Executive Savings Plans RESOLVED: The shareholders of Verizon Communications, Inc. urge our Board of Directors to adopt a policy that prohibits the practice of paying above-market earnings on thenon-tax-qualified retirement saving or deferred income account balances of senior executive officers. This policy should be implemented prospectively and apply only to senior executive officers in a manner that does not interfere with any contractual rights. SUPPORTING STATEMENT Verizon offers senior executive officers far more generous retirement saving benefits thanrank-and-file managers and other employees receive under the company’s tax-qualified saving plans, in our view. One costly and unjustifiable feature is the payment of an above-market rate of return on the multi-million dollarnon-tax-qualified savings and deferred income account balances of senior executives. The Verizon Executive Deferral Plan allows executives to contribute or defer compensation significantly above applicable IRS limits on contributions to 401(k) and othertax-qualified savings plans, IRS limits, including without limit the long-term incentive compensation that represents the bulk of their annual income. Proxy advisor Institutional Shareholder Services supported this proposal in its 2018 proxy analysis report, stating that “while it is common to maintain additional supplemental retirement accounts for executives, providing above-market earnings on investment options is not common market practice.” The ISS report also noted that the “practice of paying above-market earnings increases the expense to shareholders and is not considered a best practice.” For example, in 2017then-CEO Lowell McAdam received $73,949 in “above-market earnings” on his nonqualified plan assets (2018 Proxy, Summary Compensation Table, page 46, column h), which exceeded $13 million at year end (2018 Proxy, page 52). For CEO McAdam, these above-market earnings came on top of $325,150 in Company matching contributions to his Deferral Plan account and $18,850 to his Management Savings Plan account (2018 Proxy, page 47). The $418,000 in total Company matching contributions and “above-market earnings” received by McAdamfor just one year dwarfed the maximum Company contribution available to managers or other employees participating only in thetax-qualified Savings Plan. Verizon provides a matching contribution equal to 100% of the first 6% of base salary and short-term incentive compensation that a participant contributes (Proxy, page 42). 56Verizon 2020 Proxy Statement
Items 4 – 8 Shareholder Proposals Item 5: Special ShareownerShareholder Meetings Together, the combined cost of these company contributions and above-market earnings can be substantial. Over the10-year period (2008 to 2017) Verizon reported paying McAdam a total of $5,470,490 in nonqualified plan contributions and above-market earnings (page 52, table note 4). Above-market earnings onnon-qualified accounts are not performance-based and thus do nothing to align management incentives with long-term shareholder interests. In addition, gross disparities between retirement benefits offered to senior executives and other employees risk potential morale problems and reputational risk. PleaseVOTE FOR this proposal. | | | | | | | | | | | | | | | |  | | The Board of Directors recommends that you voteAGAINST this proposal for the following reasons: | | | | | The Board of Directors opposes this proposal because it misrepresents the investment returns paid to participants in Verizon’s Executive Deferral Plan, which we refer to as the Deferral Plan. The proponent’s claim that Verizon pays senior executives an “above-market” rate of return on their account balances in the Deferral Plan is inaccurate. None of the 28 hypothetical investment options offered under the Deferral Plan pay a premium above what can be earned in the market. All but one of the hypothetical investment options simply mirror the performance of the investment options available under Verizon’stax-qualified 401(k) savings plan. The one additional hypothetical investment option, which we refer to as the Moody’s investment option, offers a return equal to the long-term, high-grade corporate bond yield average as published by Moody’s Investor Services Inc. Because the Moody’s investment option offers a cash-based, interest only return, under an SEC rule, earnings on balances invested in that option may be reportable as “above-market” in the proxy statement year in any given year. In 2019, earnings from the Moody’s investment option did not constitute “above-market” earnings under this rule. In 2019 the annual rate of return for the Moody’s investment option was approximately 4%. The Board believes that it is unfair and unreasonable to characterize this rate of return – which is basically reflective of the current market rate for loans to large companies such as Verizon – as a “costly and unjustifiable feature” of Verizon’snon-qualified savings plan. Moreover, because the return on the Moody’s investment option is lower than that offered by other investment options, it does not increase the expense of Verizon’s retirement programs. | | |
Item 5: Special Shareholder Meetings Kenneth Steiner, owner of no less than 500 shares of Verizon’s common stock, proposes the following:
Proposal 4- Expand5 – Make Shareholder AbilityRight to Call a Special Shareholder Meeting More Accessible 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 10% of our outstanding common stock the power to call a special shareowner meeting (or the standard closest to 10% permitted by state law).meeting. This proposal does not impact our board’s current power to call a special meeting. Scores of Fortune 500 companies allow 10% of shares to call a special meeting. Special shareholder meetings allow shareownersshareholders to vote on important matters, such as electing new directors that can arise between annual meetings.
This proposal topic won more than 70%-support at Edwards Lifesciences and SunEdison in 2013. VerizonSunEdison. This proposal topic, sponsored by William Steiner, also won 78% support at a Sprint annual meeting with 1.7 Billionyes-votes. Nuance Communications (NUAN) shareholders gave 49%94%-support to thisa 2018 shareholder proposal topic in 2017. This 49%-vote would have been more than 50% if small shareholders had the same access to corporate governance information as large shareholders. A shareholder right to call a special meeting and to act by written consent and are 2 complimentary ways to bring an important matter to the attentioncalling for 10% of both management and shareholders outside the annual meeting cycle.
More than 100 Fortune 500 companies provide for shareholders to call a special meeting andmeeting.
Verizon 2020 Proxy Statement 57
Items 4 – 8 Shareholder Proposals Item 5: Special Shareholder Meetings This proposal topic won 49% support at the 2017 Verizon annual meeting. This 49%-suport [sic] represented at least 51%-suport [sic] from the shareholders who have access to act by written consent. Weindependent proxy voting advice. Thus Verizon should have no rightadopted this proposal in 2018. Instead Verizon flooded shareholders with advertisements to act by written consent – hencevote again this topic at the greater need2018 annual meeting. The current stock ownership threshold of 25% can mean that more than 50% of shareholders must be contacted during a short window of time to expand the right tosimply call a special meeting at Verizon. Now is a good time to adopt this proposal topic since our stock price has been dead-money since late 2016. It is disturbingmeeting. Plus many shareholders, who are convinced that according to EDGAR on June 8, 2015 our management took action to expand the powers of management and restrict the right of shareholders at our annual meeting. This shows that during times of mediocre stock price performance our top management is focused on diminishing the role of shareholders.
Any claim that a shareholder right to call a special meeting should be called, can be costly – may be largely moot. When shareholders havemake a good reason to callsmall paperwork error that will disqualify them from counting toward the 25% ownership threshold that is now needed for a special meetingmeeting.
Since special shareholder meetings allow shareholders to vote on important matters, such as electing new directors, adoption of this proposal might motive [sic] our directors to perform better. For instance Daniel Schulman, who chaired the Verizon executive pay committee, was rejected by 30% of shares at the 2019 annual meeting. Not surprisingly 10% of Verizon shares rejected executive pay in 2019 – our board should be ablewhen most companies can keep the rejection rate around 5%. The 10% rejection was all the more a slap because Verizon sent shareholders special advertisements that focused exclusively on the supposed merits of the Verizon executive paycheck. Thus it was not a level playing field for the 2019 Verizon executive paycheck vote. Our Chairman/CEO Hans Vestberg had the poorest vote showing after Mr. Schulman. It is unusual for a Chairman / CEO to wake up and take positive responding action to makehave such a special meeting unnecessary.poor ranking in shareholder voting. Please vote yes:yes again: ExpandMake Shareholder AbilityRight to Call a Special Shareholder Meeting—Meeting More Accessible – Proposal 45
| | | | | | | | 
| | | | | | | | | | | | OurThe Board of Directors recommends that you voteAGAINST against thisproposal this proposal for the following reasons:
| | | | | The Board believes that this proposal is unnecessary because Verizon’s shareholders already have a meaningful right to call a special meeting. Under Verizon’s bylaws, any individual shareholder who owns at least 10%, or multiple shareholders who together own at least 25%, of Verizon’s 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 costs 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 believes that the ownership thresholds for individual shareholders and for groups of shareholders contained in Verizon’s 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. | | |
| | | 62 | | |Verizon 2018 Proxy Statement |
58Verizon 2020 Proxy Statement
Items 4 – 98 Shareholder Proposals| Item 4: Special Shareowner Meetings6: Lobbying Activities Report
The Board believes that this proposal is unnecessary because Verizon’s shareholders already have a meaningful right to call a special meeting. Under Verizon’s bylaws, any individual shareholder who owns at least 10%, or multiple shareholders who together own at least 25%, of Verizon’s 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 Verizon’s 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.
Item 5:6: Lobbying Activities Report Boston Common U.S. Equity Fund, owner of 17,120 shares of Verizon’s common stock, and a co-sponsor propose the following:
Whereas, we believe in full disclosure of Verizon Communication lnc.’s (“Verizon”)Verizon’s direct and indirect lobbying activities and expenditures to assess whether Verizon’s lobbying is consistent with its expressed goals and in the best interests of shareholders. Resolved, the shareholders of Verizon request the preparation of a report, updated annually, disclosing: | 1. | Company policy and procedures governing lobbying, both direct and indirect, and grassroots lobbying communications. |
| 2. | Payments by Verizon used for (a) direct or indirect lobbying or (b) grassroots lobbying communications, in each case including the amount of the payment and the recipient. |
| 3. | Verizon’s membership in and payments to anytax-exempt organization that writes and endorses model legislation. |
4. | Description of management’s decision makingdecision-making process and the Board’s oversight for making payments described in section 2 above. |
For purposes of this proposal, a “grassroots lobbying communication” is a communication directed to the general public that (a) refers to specific legislation or regulation, (b) reflects a view on the legislation or regulation and (c) encourages the recipient of the communication to take action with respect to the legislation or regulation. “Indirect lobbying”lobbying’’ is lobbying engaged in by a trade association or other organization of which Verizon is a member. Both “direct and indirect lobbying”lobbying’’ and “grassrootsgrassroots lobbying communications” include efforts at the local, state, and federal levels. The report shall be presented to the AuditCorporate Governance and Policy Committee or other relevant oversight committees and posted on Verizon’s website. Supporting Statement We encourage transparency and accountability in theVerizon’s use of corporate funds to influence legislation and regulation. Since 2010,lobby. Verizon has spent over $100 million$119,772,066 from 2010 – 2018 on federal lobbying (opensecrets.org).lobbying. This figure does not include state lobbying expenditures to influence legislation in the 50 states where Verizon also lobbies in all 50 states (“Amid Federal Gridlock, Lobbying Rises in the States,”Center for Public Integrity, February 11, 2016),1 but disclosure is uneven or absent. For example, Verizon has drawn attention for itsspent $8,405,292 on lobbying on net neutrality (“Comcast, Verizon, and AT&T Want Congress to Make a Net Neutrality Law because They Will Write It,”The Verge, July 12, 2017). | | | Verizon 2018 Proxy Statement| | | 63 |
Items 4in California from 2010 – 9 Shareholder Proposals |Item 5: Lobbying Activities Report
2018. Verizon is a member of the Chamber of Commerce which has spent over $1.3$1.5 billion on lobbying since 1998.1998, and also belongs to the Business Roundtable (BRT), CTIA, National Association of Manufacturers (NAM) and USTelecom. Both the BRT and NAM are lobbying against shareholder rights to file resolutions. We commend Verizon for now disclosing its significant memberships in trade associations and social welfare organizations, but serious disclosure concerns remain. Verizon does not disclose its memberships in, or payments to trade associations, ornor the amounts used for lobbying. Transparent reporting would reveal whether company assets We are being used for objectives contrary toconcerned that Verizon’s long-term interests.lack of lobbying disclosure presents reputational risk when it contradicts Verizon’s public positions. For example, Verizon was honored asstates it is committed to an EPA 2016 Energy Star Partner of the Year,open internet, yet the Chamber has sued the EPA to block the Clean Power Plan. We question if Verizon’s membership in the Chamber presents reputational risks on the issue of addressing climate change. And VerizonUSTelecom is a member of the American Legislative Exchange Council (ALEC), and its ALEC membershipactively fighting against net neutrality.2 CTIA has drawn press scrutiny (“FCC Commissioner Tells ALECfor lobbying against a throttling ban in California.3 Verizon uses the Global Reporting Initiative (GRI) for sustainability reporting, yet currently fails to Help Squash Net Neutrality,”Huffington Post, May 7, 2017). Over 100 companies have publicly left ALEC, including 3M, Procter & Gamble, Shell, Sprint,T-Mobilereport “any differences between its lobbying positions and Walgreens.any stated policies, goals, or other public positions” under GRI Standard 415.
We believe reputational damage stemming from misalignment between policy positions and actual direct and indirect lobbying efforts harms long-term value creation by Verizon. Thus, we urge Verizon to expand its lobbying disclosure. | 1 | https://publicintegrity.org/state-politics/here-are-the-interests-lobbying-in-every-statehouse/ |
| 2 | https://arstechnica.com/tech-policy/2018/03/attverizon-lobbyists-to-aggressively-sue-states-that-enact-net-neutrality/ |
| 3 | https://arstechnica.com/tech-policy/2019/04/verizon-backed-lobby-group-opposes-ban-on-throttling-of-firefighters/ |
Verizon 2020 Proxy Statement 59
Items 4 – 8 Shareholder Proposals Item 6: Lobbying Activities Report | | | | | | | |
| | | | | | | | | | | | OurThe Board of Directors recommends that you voteAGAINST against thisproposal this proposal for the following reasons:
| | | | | Verizon is affected by a wide variety of government policies – from telecommunications regulation, to taxation, to health care and more – that have an enormous impact on our business. We owe it to our investor, customer, and employee stakeholders to advocate for public policies at the federal, state and local levels that will enable us to compete fairly in the marketplace and provide customers with the products and services they want. Governance. Verizon is committed to the highest ethical standards when engaging in any political activity. Our political activity, including lobbying, is overseen by the Corporate Governance and Policy Committee of our Board of Directors, which receives a comprehensive briefing on these activities at least annually. In addition, Verizon’s political activity is subject to robust internal controls. The Code of Conduct requires that all lobbying activities on behalf of Verizon be authorized by public policy or legal personnel. In addition, corporate policy and training materials provide guidance to employees regarding legal requirements in connection with lobbying activities. Transparency & Disclosure. Verizon knows that transparency regarding our political activity is critical to maintaining the trust of our stakeholders. As a result, we inform the public about our political activity in the following ways: • We publish a Political Engagement Report on our corporate website that is updated twice a year. The report lists all political action committee contributions and corporate political contributions and discloses our Public Policy organization’s memberships in trade associations and issue advocacy organizations for which our support exceeds $50,000 annually. The Report also provides a link to our federal lobbying reports. https://www.verizon.com/about/sites/default/files/2019-Political-Engagement-Report-Mid-Year-Disclosure.pdf. • Our political action committees file public disclosure reports with the Federal Election Commission and state and local campaign finance regulators in accordance with applicable laws. https://www.fec.gov/data/browse-data/?tab=committees. • We file public reports with the U.S. Congress and state and local lobbying regulatory bodies disclosing our lobbying activities. Our federal reports are available at https://lobbyingdisclosure.house.gov/ and disclose our lobbying activities and the amounts we spent on those activities. Approach to Advocacy. We make our voice heard through participation in a number of trade associations and by supporting advocacy organizations. Verizon supports these organizations for a variety of reasons, including to reflect our interest in the community, to acquire valuable industry and market expertise, and to support specific strategic policy and business goals and interests. These groups often have a diversity of members, interests and viewpoints that do not necessarily reflect Verizon’s beliefs or priorities and we may not always agree with all of the positions of each organization or its members. When we disagree with a position of an organization we support, we communicate our concerns through the senior executives who interact with these organizations. Verizon also takes these differences under consideration when determining whether support of an organization is, on balance, in the best interests of the Company and its stakeholders. Responsiveness to Stakeholders. We believe our transparency with respect to our political and lobbying activity is in keeping with our commitment to good corporate governance and is a sign of our responsiveness to the interests of our stakeholders. Over the past year, Verizon has engaged with certain of our stakeholders on these issues and has substantially implemented their requests concerning our political spending and lobbying disclosures. The Proposal. The proposal focuses only on the fact that Verizon does not list the exact payment amount made to each trade association or organization listed in our Report. The proposal states that “Verizon’s lack of lobbying disclosure presents reputational risk when it contradicts Verizon’s public positions.” The proposal lists various organizations that Verizon is (or previously has been) a member of and discusses its concerns about positions taken by those organizations. Clearly then, Verizon’s current disclosure provides the transparency necessary for the proponent to evaluate any potential reputational risk to Verizon arising from these memberships. The proponent also does not explain why Verizon’s current disclosure – a list of our Public Policy organization’s memberships in trade associations and issue advocacy organizations for which our support exceeds $50,000 annually – does not satisfy its stated concerns and why specific payment amounts would affect its analysis. Nor does the proponent explain why Verizon’s governance and stated approach to advocacy is deficient to protect against reputational risk. For these reasons, the Board does not believe that the additional requested disclosure would be valuable to shareholders. | | |
Verizon engages in advocacy at the federal, state and local levels in order to educate government officials, regulators and the public about Verizon’s position on public policy issues that impact our business, customers, employees and the communities we serve. Given the highly regulated and competitive nature of the communications industry, it is critical that Verizon advocates for policies that will enable the Company to compete fairly in the marketplace and provide customers with the services they want.
Verizon fully complies with the disclosure obligations imposed by the federal, state and local laws relating to its lobbying activities. At the federal level, Verizon files public quarterly reports disclosing its lobbying expenditures and detailing its lobbying activities, the entities it lobbied and the subject matters upon which it lobbied. Any lobbying firms hired by Verizon file similar reports. In addition, Verizon and each of itsin-house60 and external lobbyists file reports disclosing political contributions and honorary payments. The federal lobbying disclosure reports are publicly available and can be found on the following website: http://lobbyingdisclosure.house.gov/. Verizon also files all lobbying reports required by state law, which has even broader disclosure requirements than federal law in some cases. 2020 Proxy Statement
Verizon participates in a number of trade associations, which not only provide valuable industry and market expertise, but also advocate positions on behalf of their members. At times, Verizon’s views on issues may differ from those advanced by one or more of these associations because not all members of an association will come to agreement on every issue. Verizon takes these differences under consideration when determining whether membership in a trade association is, on balance, in the best interests of Verizon and its shareholders. Disclosure of the information contemplated in the proposal could be used to unfairly suggest that Verizon supports every position taken by an organization to which it provides financial support, and to pressure Verizon to end its membership in those organizations. This would deprive Verizon of a valuable advocacy tool. In addition, many trade associations are registered under the Lobbying Disclosure Act and file their own lobbying reports. These reports disclose the trade association’s lobbying activities and identify members who contribute more than $5,000 per quarter to the association and actively participate in the planning, supervision, or control of the association’s lobbying activities.
Verizon is committed to the highest ethical standards when engaging in any political activities. Verizon’s lobbying activities are subject to robust internal controls, including oversight by the Corporate Governance and Policy Committee of the Board of Directors. The Code of Conduct requires that all lobbying activities on behalf of Verizon be authorized by public policy or legal personnel. In addition, corporate policy and training materials provide guidance to employees regarding legal requirements in connection with lobbying activities.
Because Verizon is already subject to extensive reporting requirements regarding its lobbying activities and has strong internal controls to ensure that any lobbying activity is conducted in accordance with the law and in furtherance of the Company’s and its shareholders’ interests, the Board does not believe that the additional requested disclosure would be valuable to shareholders.
| | | 64 | | |Verizon 2018 Proxy Statement |
Items 4 – 98 Shareholder Proposals| Item 6: Independent Chair7: User Privacy Metric Item 6: Independent Chair7: User Privacy Metric User Privacy Verizon is able to track how long people stream music, play online games, or use social media. It can tell whether a user shops atAFL-CIOhigh-end Reserve Fund, ownerexpensive stores, is visiting online dating sites, or what news outlets they spend more time reading. It knows wireless-device location and internet protocol addresses. In short, Verizon has legally permissible access to enormous amounts of 2,455user information. That information can be legally valuable and revenue generating for the company depending on how it is used and which third-parties are allowed to use it. ln 2018, following revelations from US Senator Wyden that about 75 companies had access to Verizon customers’ locations, the company announced it would wind down those relationships. While the tech industry refuses to scan emails for information to sell to advertisers, Verizon unit Oath reportedly continues to do so and pitches these services to advertisers. In March 2019, the Federal Trade Commission issued orders to seven U.S. Internet broadband providers, including Verizon, seeking information the agency will use to examine how these companies collect, retain, use, and disclose information about consumers and their devices. ‘‘The FTC is initiating this study to better understand Internet service providers’ privacy practices in light of the evolution of telecommunications companies into vertically integrated platforms that also provide advertising-supported content. Under current law, the FTC has the ability to enforce against unfair and deceptive practices involving Internet service providers.” In May 2019, Verizon and other wireless carriers were sued in Federal court for allegedly violating customers’ privacy rights by selling geolocation data to third parties. In addition to Federal interest and litigation, some states are drafting rules limiting how broadband-customer data can be used. According to a September 2019Harris-IBM poll, 83 percent of US consumers said that if a company shares of Verizon’s common stock, proposestheir data without their permission, they will not do business with them. Resolved: Verizon shareholders request the following: RESOLVED: ShareholdersHuman Resources Committee of Verizon Communications Inc. (the “Company”) urge the Board of Directors (the “Board”) to take the steps necessary to adopt a policy to require that the Chairman of the Board shall be an independent director who has not previously served as an executive officer of the Company. The policy should be implemented so as not to violate any contractual obligations, with amendments to the Company’s governing documents as needed. The policy should also specify the process for selecting a new independent Chairman if the current Chairman ceases to be independent between annual meetings of shareholders. Compliance with the policy may be excused if no independent director is available and willing to be Chairman.
SUPPORTING STATEMENT
Our Company’s CEO Lowell McAdam has also served as Chairman of the Board since 2012. We believe the combination of these two roles in a single person weakens a corporation’s governance, which can harm shareholder value. In our view, the Chairman should be an independent director, who has not previously served as an executive, in order to provide robust oversight and accountability of management, and to facilitate effective deliberation of corporate strategy, which we believe, is difficult to accomplish when the CEO serves as Chairman.
Our Company faces significant business challenges that we believe make it more difficult for one person to effectively serve as both CEO and Chairman. Increased competition in the wireless market has challenged our Company’s customer growth rate. In response, our Company reintroduced unlimited data plans in 2017. However, we believe that these new unlimited data plans, combined with the shift to unsubsidized equipment, have hurt our Company’s wireless revenue. Our Company’s wireless revenue and operating income declined for the first three quarters of 2017 compared with the first three quarters of 2016.
Our Company is also in the process of strategically repositioning itself by moving into the digital content and online advertising business. In 2017, our Company created Oath Inc., a new business unit for its recently acquired AOL and Yahoo subsidiaries that will compete against Facebook and Google. We believe that successfully executing this new digital media business strategy will benefit from the full time attention of a CEO who is unencumbered by the additional responsibilities of also serving as Chairman of the Board.
In our view, when the CEO serves as Chairman, this arrangement may hinder the ability of the Board to monitor the CEO’s performance and to provide the CEO with objective feedback and guidance. We believe that such oversight is particularly important given the business challenges our Company faces. We do not consider a lead independent director to be an adequate substitute for an independent Board Chairman. We believe an independent Chairman can enhance investor confidence in our Company and will strengthen the independent leadership of the Board.
For these reasons, we urge shareholders to vote FOR this resolution.
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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 of Directors fundamentally disagrees with the proposal’s rigid and prescriptive approach to the important issue of Board leadership. The Board believes that decisions concerning its leadership structure, including whether an independent Chairman is appropriate, should be based on the unique circumstances and challenges confronting Verizon at any given time, and should take into account the individual skills and experience that may be required in an effective Chairman at that time. As a result, the Board regularly reviews and assesses the effectiveness of its leadership structure.
When conducting its assessment, the Board considers, among other things, whether the current structure is appropriate to effectively address the specific business challenges posed by our industry and the long-term interests of our shareholders. The Board disagrees with the proponent’s contention that the high level of competition in the
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| | | Verizon 2018 Proxy Statement| | | 65 |
Items 4 – 9 Shareholder Proposals |Item 6: Independent Chair
| | | wireless industry and Verizon’s digital media strategy require that the roles of Chairman and Chief Executive Officer be separated. It is precisely because of today’s highly competitive and rapidly evolving technology and telecommunications landscape that the Board believes the present structure, in which our CEO serves as Chairman, facilitates the development of Verizon’s business strategy and creation of shareholder value. The Board has determined that at this time, it requires a Chairman who has a broad and deep knowledge of Verizon’s business operations and the competitive landscape, as well as a comprehensive understanding of our long-term growth strategy and related challenges.
The Board also believes that its current structure addresses the proponent’s concerns about the Board’s ability to provide objective feedback and guidance to the Chairman. Board leadership includes a strong independent Lead Director who shares governance responsibilities with the Chairman, ensuring forthright communication, effective independent oversight of management’s performance and accountability to shareholders. The independent Directors annually elect the Lead Director who acts as liaison with the Chairman, approves Board agendas, materials and schedules and has the authority to call Board meetings and executive sessions. The Lead Director also chairs executive sessions of the Board, including the session evaluating the performance and compensation of the Chief Executive Officer and the Board’s annual self-evaluation session.
The Board also has adopted policies to ensure that the independent members of the Board are fully involved in the operations of the Board and its decision making. All Directors have the opportunity to review Board agendas and request changes in advance of meetings. They also have unrestricted access to management. The independent Directors typically meet in executive session at each Board meeting. Given the robust corporate governance practices Verizon has put in place to ensure full involvement of all Directors and facilitate communications and independent oversight, the Board believes that shareholders are best served by allowing it to retain the flexibility to determine which Director is most qualified to lead the Board at any given time.
The Board understands that leadership structures evolve and that having an independent Chairman could, at some future time, be in shareholders’ best interest. However, the Board believes that eliminating its flexibility to do what is in the best interests of shareholders by instituting a general policy that would require an independent Chairman is unnecessarily rigid and unwise.
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Item 7: Report on Cyber Security and Data Privacy
The Park Foundation, Inc., owner of 260 shares of Verizon’s common stock, and aco-sponsor propose the following:
Cyber Security and Data Privacy
In September 2017, theCo-Director of the SEC’s Enforcement Division announced the creation of a “Cyber Unit” stating, “Cyber-related threats and misconduct are among the greatest risks facing investors and the securities industry.” Prior to becoming the Chairman of the SEC, Jay Clayton wrote that “cyber-threats are among the most urgent risk to America’s economic and national security and the personal safety of its citizens.”
In the United Kingdom, a Parliamentary committee studying cyber security recommended: “To ensure this issue receives sufficient CEO attention before a crisis strikes, a portion of CEO compensation should be linked to effective cyber security, in a way to be decided by the Board.”
Verizon has made several policy commitments regarding data privacy and data security. However, there is significant evidence that Verizon has not been successful at implementing those commitments and/or faces significant challenges to doing so.
In 2016, Fortune reported that “Verizon’s division that helps Fortune 500 companies respond to data breaches, suffered a data breach of its own ... [including] information on some 1.5 million customers of Verizon Enterprise.”
In July 2017, the Washington Post reported that a “communication breakdown and a vacationing employee were the reasons it took more than a week to close a leak [in June] that contained data belonging to 6 million Verizon customers.”
In October 2017, it was announced that all 3 billion accounts in subsidiary Yahoo had been breached prior to its acquisition by Verizon.
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Items 4 – 9 Shareholder Proposals |Item 7: Report on Cyber Security and Data Privacy
With its acquisition of AOL and Yahoo and the combination of these firms into a new digital media and advertising company called Oath, Verizon now reportedly aims in coming years to double its advertising reach to 2 billion people in Latin America, Asia and Europe. CNBC reported that Oath is “working with third parties to provide more transparency in telling marketers where their ads are running.” This will require sharing information and will depend on the security and policies of vendors and other third-party partners. When asked about recent data breaches, Oath’s chief revenue officer, John DeVine, “called it an ‘industry problem’ and pointed to the latest hack involving Equifax,” according to CNBC.
As these risks are significant, we believe it is advisable for the board to explore integrating cyber security and data privacy metrics into executive compensation.
Resolved:Verizon shareholders request the appropriate board committee(s) publish a report (at reasonable expense, within a reasonable time, and omitting confidential or propriety information) assessing the feasibility of integrating cyber security and datauser privacy metricsprotections into the performance measures of senior executives under the company’s compensation incentive plans.
Supporting Statement: Currently, Verizon links senior executive compensation program which it describes in its annual proxy materials. This proposal does not seek greater disclosure or information regarding cybersecurity (the criminal or unauthorized actions), but rather is focused on legally permissible and permitted uses of data.
Supporting Statement: According to page 37 of Verizon’s 2019 proxy materials, the Verizon Short-Term Plan included adjusted EPS, free cash flow, total revenue, and diversity metrics and carbon intensity metrics. Cyber securitysustainability. According to page 41 the Long-Term Plan is focused on total shareholder return, free cash flow, and retention. User privacy and how user data privacyis used are vitally important issues for Verizon and should be integrated as appropriate into seniorincluded in executive compensation plans, as we believe it would incentivize top leadership to reduce needless risk,respect user privacy, enhance financial performance, reduce risks, and increase accountability. Verizon 2020 Proxy Statement 61
Items 4 – 8 Shareholder Proposals Item 7: User Privacy Metric | | | | | | |
| | | | | | | | | | | Our
The Board of Directors recommends that you voteAGAINST against this proposal for the following reasons: |
| | | | The Board strongly believesagrees that protecting Verizon’s systems and networks from unauthorized access or damage and maintainingproviding strong and meaningful privacy protections and security protectionschoices for our customers’ information arecustomers is critical to the long-term success of the Company.our business. However, the Board does not thinkbelieve that the proposedmyriad of “user privacy” considerations that must be balanced by our business can be meaningfully addressed in a quantitative performance metric like the metrics for seniorcurrently used in our executive compensation would haveprogram to incentivize diversity in the presumed effect of preventing a network or data security breach for the following reasons: • There is not necessarily a correlation between a senior executive’s actions and the prevention of cyber or data security incidents. Diversityworkplace and carbon abatement metrics can be effective incentives, because executives can take diversity and carbon abatement into account in their hiring and sourcing decisions throughoutinitiatives. Rather, the year. Their decisions have a direct impact on their achievement of the performance target. In contrast, the correlation between a senior executive’s actions and “success” in preventing a compromise of the company’s networks or customer information is more tenuous. For example, a company’s networks and information systems may be infiltrated by a malicious state actor whether or not an executive has taken all reasonable precautions and allocated substantial resources to protective technologies, security and privacy protocols and employee training.
• The proposal incorrectly suggests that cybersecurity and data privacy performance metrics are analogous to the diversity and carbon abatement performance metrics that Verizon uses in its short-term incentive awards. While there are mathematical and scientifically accepted methodologies for quantifying diversity and carbon abatement and assessing a company’s performance in those areas from period to period, there is no accepted methodology for measuring “success” in the area of cybersecurity and data privacy.
As part of its oversight of Verizon’s risk management, the Board and the Board’s Audit Committee receive regular updates on both cybersecurity and privacy matters. The Board believes that having robust cybersecurity and privacy programs in place is a morethe most effective way to prevent security incidents thangain customers’ trust while ensuring that Verizon continues to deliver a high quality customer experience and comply with its legal obligations is to have a robust privacy governance framework. Verizon’s framework includes a dedicated privacy team and clear policies and practices that disclose the proposed compensation metrics. For example:data we collect and how we use it, inform our customers about how they can control the use of their data, and educate our customers about privacy safeguards that Verizon has put in place.
• Verizon has a dedicated Chief Information Security Officer whose team is responsible for leading enterprise-wide information security strategy, policy, standards, architecture and processes. Verizon’s comprehensive information security program includes, among other aspects, vulnerability management, antivirus and malware protection, file
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Items 4 – 9 Shareholder Proposals |Item 7: Report on Cyber Security and Data Privacy
| integrity monitoring, encryption and access control. Verizon maintainsup-to-date security and incident response plans to handle cybersecurity incidents, including those involving unauthorized access to private information.
•Governance. Verizon has a dedicated Chief Privacy Officer whose team advises the business on privacy risks and assesses the effectiveness of privacy controls. The Chief Privacy Officer annually briefs the Board’s Audit Committee on data privacy risks and mitigating actions. All Verizon hasemployees are responsible for following Verizon’s privacy practices. In addition, privacy is taken into account during all phases of a product or service’s lifecycle, including the initial design of the product or service.
Privacy Policy. Verizon’s privacy policy, which can be accessed on our website at http://www.verizon.com/about/privacy/full-privacy-policy, provides information about our privacy practices, including our information sharing and data retention practices. Our privacy policy contains information about the choices our customers can make about how their information is used. The policy also explains our use of technical, administrative and physical safeguards in place to help protect against unauthorized access to, use or disclosure of customer information and data we collect or store. Our privacy policy also includes information about the additional privacy practices that apply to specific Verizon apps and store.services; in some instances those apps or specific services have their own privacy policies. We update our privacy policy and supporting materials when we believe additional information will help clarify our practices and when we introduce new products, services or practices. • All Verizon employees undergo annual training on Verizon’sGiven the challenge of formulating a meaningful, quantitative metric for measuring performance in the area of user privacy and the robust governance framework, privacy policies and procedures relating to privacy and information security and are subject to a strict code of conductsafeguards that requires them to protectVerizon already has in place, the privacy and security of customer information consistent with the Company’s policies.
The Board believesdoes not believe that incorporating the proposeduser privacy metrics into Verizon’sthe executive compensation program would not have the intended effect of improving the Company’s cybersecurity and dataenhance Verizon’s privacy protections.
program. | | |
Item 8: Executive Compensation Clawback Policy
Jack K. and Ilene Cohen, owners of 839.375 shares of Verizon’s common stock, propose the following:
Executive Compensation Clawback Policy
RESOLVED: Verizon shareholders urge our Board to strengthen the Company’s compensation clawback policies, as applied to senior executive officers, to state that “conduct”—rather than “willful misconduct”—may trigger application of any such policy, with the Board or its Human Resources Committee to report to shareholders the results of any deliberations about whether to cancel or seek recoupment of incentive compensation paid, granted or awarded to a senior executive officer. These amendments should operate prospectively and be implemented so as not to violate any contract, compensation plan, law or regulation.
SUPPORTING STATEMENT
Verizon’s current “clawback” policy allows for recovery of compensation from senior executives if there is “willful misconduct . . . that results in significant reputational or financial harm to Verizon.” In addition, the Board’s Human Resources Committee can require cancellation or forfeiture of incentive compensation if Verizon is “required to materially restate its financial results because of the employee’s willful misconduct or gross negligence” (2017 Proxy, page 47).
We view a clawback policy that is limited to “willful misconduct,” and does not require disclosure to shareholders, as too narrow. Although incentive compensation may be clawed back due to “gross negligence,” this is limited to financial harm so large it results in a material restatement of financial results.
We also are concerned a “willful misconduct” standard may be too vague to ever be applied, even in situations involving significant financial or reputational injury to Verizon. It seems unlikely, for instance, that a “willful misconduct” standard would encompass situations where an executive fails to exercise oversight responsibilities that result in significant damage to the Company.
Wells Fargo is a prime example. Wells Fargo agreed to pay $185 million to resolve claims of fraudulent sales practices that went on for years before Congressional hearings last year led the bank’s board to clawback $136 million in compensation from two top executives. That step was taken pursuant to a clawback policy of the sort we advocate here. Wells Fargo’s board found the CEO had turned a blind eye to the creation of fraudulent accounts by others.
Like Wells Fargo, Verizon is a consumer-facing company with significant exposure to reputational and financial harm from large fines or restitutions for conduct alleged to violate federal or state laws.
Recent high-profile payouts underscore the need for a stronger policy here. In 2015 Verizon paid $90 million to settle a Federal Communications Commission investigation alleging that Verizon placed unauthorized third-party charges on subscribers’ mobile phone bills- a practice called “cramming.” In 2010 Verizon paid $25 million to settle FCC charges of overcharging 15 million customers for cellphone data.
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62Verizon 2020 Proxy Statement
Items 4 – 98 Shareholder Proposals| Item 8: Executive Compensation ClawbackAmend Severance Approval Policy Did
Item 8: Amend Severance Approval Policy Shareholder Ratification of Executive Severance Packages RESOLVED: Verizon shareholders urge the Board to seek shareholder approval of any senior executive officer’s new or renewed compensation package that provides for severance or termination payments with an estimated total value exceeding 2.99 times the sum of the executive’s base salary plus target short-term bonus. “Severance or termination payments” include any cash, equity or other compensation that is paid out or vests due to a senior executive’s termination for any reason. Payments include those provided under employment agreements, severance plans, andchange-in-control clauses in long-term equity plans. Payments do not include life insurance, pension benefits, or other deferred compensation earned and vested prior to termination. “Estimated total value” includes:lump-sum payments; payments offsetting tax liabilities; perquisites or benefits not vested under a plan generally available to management employees; post-employment consulting fees or office expense; and equity awards if vesting is accelerated, or a performance condition waived, due to termination. The Board shall retain the option to seek shareholder approval after material terms are agreed upon. SUPPORTING STATEMENT While we support generous performance-based pay, we believe that requiring shareholder ratification of “golden parachute” severance packages with a total cost exceeding 2.99 times base salary plus target bonus better aligns compensation with shareholder interests. Verizon’s board scrutinize2019 Proxy discloses (page 66) that if CEO Hans Vestberg is terminated without cause, whether or not termination follows a change in control, he could receive an estimated $27.6 million in termination payments, nearlyseven (7) times his 2018 base salary plus short-term bonus. Similarly, former CEO McAdam received an estimated $27 million in separation payments due to his retirement atyear-end 2018, nearlyfive times his 2018 base salary plus short-term bonus. These payments represent the actionsestimated value of executives responsibleperformance-based equity grants covering periods as long as two years after McAdam’s retirement (2019 Proxy, page 66). These termination payments are in addition to compensation earned prior to separation that pay millions more, including executive life insurance, pension and nonqualified deferred compensation plans. A decade ago, following a 59% shareholder vote in favor, Verizon adopted a policy to seek shareholder approval for severance with a “cash value” in excess of 2.99 times salary plus target short-term bonus. But the current policy has a huge loophole: It excludes the value of the accelerated vesting of performance shares (PSUs) and restricted stock RSUs), including accrued dividends, from the total cost calculation that triggers the need for shareholder ratification. If a senior executive terminates following a “change in control, failures” all outstanding PSUs immediately “vest at the target level performance” (page 49). Had the executive not terminated, PSUs would not vest or pay out until the end of the performance period (up to seethree years later) – and could be worthless if any incentive compensationperformance or tenure conditions are not satisfied. This practice effectively waives performance conditions that justify “performance-based” restricted stock. We believe Verizon’s severance policy should be recouped? If not, why not? Incentives influence behavior. At companies like Verizon, whereupdated to include the vast majoritytotal cost of senior executive compensation is tied to financial performance, we believe incentives not to take undue risks to boost short-term profitability are appropriate.termination payments.
PleaseVOTE FORthis proposal. Verizon 2020 Proxy Statement 63
Items 4 – 8 Shareholder Proposals Item 8: Amend Severance Approval Policy | | | | | | | |
| | | | | | | | | | | | OurThe Board of Directors recommends that you voteAGAINST against this proposal for the following reasons:
| | | | | Verizon already has a longstanding policy to obtain shareholder ratification of any new executive employment agreement or severance agreement that provides for severance benefits with a total cash value exceeding 2.99 times the sum of the executive’s base salary plus target short-term incentive opportunity. The proposal would significantly expand this policy by including the total estimated value of outstanding equity awards in the calculation of severance benefits. The Board believes that the proposal is not in the best interests of shareholders for the following reasons: |
Proposal could create misalignment of pay and performance. In order to align executives’ and shareholders’ interests and encourage the creation of long-term shareholder value, all of Verizon’s senior leaders receive long-term equity awards in the form of restricted stock units and performance stock units as part of their annual compensation package. Currently, the grant date value of the named executive officers’ equity award represents more than half of their total compensation opportunity each year. At the current equity award levels, the estimated total value of each new grant plus any outstanding grants would trigger the shareholder approval requirement of the proposal. Because the annual equity grants could not be finalized until the next shareholder meeting, the proposal would make the current compensation program impractical to administer. To avoid obtaining shareholder approval of the executives’ compensation packages every year, the Board’s Human Resources Committee would have to redesign the executive compensation program to significantly reduce the amount of equity in the variable versus fixed pay compensation mix. For this reason, the Board believes that the proposal would have the effect of reducing the executives’ exposure to the Company’s common stock and accordingly result in misalignment with shareholder interests. | Proposal could put Verizon at a competitive disadvantage. The Board also believes that the proposal could have an adverse effect on Verizon’s ability to recruit and retain leadership talent because a significant portion of the executives’ annual compensation would be uncertain and at risk for at least the first four months of the year until a shareholder vote could be held. Proposal could create increased risk for shareholders. The proposal directly conflicts with Verizon’s shareholder-approved, broad-based Long-Term Incentive Plan, which expressly provides for acceleration of outstanding equity awards in the event of an involuntary termination following a change in control of the Company. The Board believes, and our shareholders have agreed, that this provision encourages our executive officers, who might be distracted by a potential loss of employment, to remain with the Company and diligently work to achieve Board- and shareholder- approved goals, including completing a transformative transaction and any related transition process. Indeed, a substantial majority of companies include this type of provision in their equity awards because it promotes stability and focus during a time of potential uncertainty. By effectively requiring the elimination of this important retention tool, the proposal could increase risk for shareholders in change in control transactions. Proposal discourages the use of performance-based equity awards. Except in the case of termination following a change in control, Verizon does not waive any performance conditions with respect to outstanding performance-based equity awards. Payouts are determined at the end of the applicable award cycle, and there is no guarantee of any payout amount. Despite the fact that the payout of an executive’s performance stock unit award can be zero, the proposal requires that the full target value of that award be used in calculating the value of severance benefits. In other words, it treats a performance-based equity award the same as an award of stock. The Board believes that this discourages the use of performance-based equity awards. The Board believes that Verizon’s existing policy provides reasonable and appropriate limits on severance payments and that the proposal is defective because it would allow for a clawback of compensation without taking into account an executive’s personal culpability. The Board designed Verizon’s clawback policiesbe contrary to target and discourage intentional wrongdoing or grossly negligent behavior that could lead to significant financial or reputational harm or a material restatement of financial results. • Verizon’s clawback policy for senior executives gives Verizon the right to cancel and/or demand reimbursement of cash and equity incentive compensation if the Human Resources Committee of the Board determines that the senior executive engaged in willful misconduct in connection with the performance of his or her duties that resulted in significant reputational or financial harm to the Company.
• An additional clawback policy that applies to executives’ equity grants under Verizon’s Long-Term Plan requires the cancellation and/or repayment of the executive’s cash and equity incentive compensation if the Committee determines that Verizon was required to materially restate its financial results because of the executive’s willful misconduct or gross negligence.
The Board of Directors believes that a clawback policy that does not take into account personal culpability is inappropriate because it would potentially allow for a clawback of compensation for legitimate business decisions that subsequently come under scrutiny. By seeking to disregard personal culpability, the proposal could discourage senior executives from exercising the business judgment necessary to deliver shareholder value. The Board also believes that mandating disclosure of its deliberations is inappropriate because it would deprive the Board of the ability to exercise judgment and discretion with respect to the disclosure of potentially sensitive information.
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Item 9: Nonqualified Savings Plan Earnings
The Association of BellTel Retirees Inc., owner of 214 shares of Verizon’s common stock, proposes the following:
Above-Market Returns on Nonqualified Executive Savings Plans
RESOLVED:The shareholders of Verizon Communications, Inc. urge our Board of Directors to adopt a policy that prohibits the practice of paying above-market earnings on thenon-tax-qualified retirement saving or deferred income account balances of senior executive officers. This policy should be implemented prospectively and apply only to senior executive officers in a manner that does not interfere with any contractual rights.
SUPPORTING STATEMENT
Verizon offers senior executive officers far more generous retirement saving benefits thanrank-and-file managers and other employees receive under the company’s tax-qualified saving plans, in our view. One costly and unjustifiable feature is the payment of an above-market rate of return on the multi-million dollar supplementalnon-tax-qualified savings and deferred income account balances of senior executives.
Proxy advisor Institutional Shareholder Services flagged this practice in its 2017 proxy analysis report, stating that Verizon “provided guaranteed earnings rates on deferred compensation that are above what can be earned in the general marketplace. This non-performance-based benefit creates additional costs to shareholders.”
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Items 4 – 9 Shareholder Proposals |Item 9: Nonqualified Savings Plan Earnings
The ISS report also notes that the payment of “above-market or preferential earnings to executives . . . increases the ultimate expense of the plan to shareholders and is not considered a best practice.”
Because of IRS limits on contributions to 401(k) and othertax-qualified savings plans, many companies maintainnon-tax-qualified savings plans for additional contributions by executives. The Verizon Executive Deferral Plan allows executives to contribute or defer compensation significantly above applicable IRS limits, including without limit the long-term incentive compensation that represents the bulk of their annual income.
In 2016, CEO Lowell McAdam received $100,855 in “above-market earnings” on hisnon-qualified plan assets, which totaled just under $12 million atyear-end. The six named executive officers cumulatively held more than $50 million innon-qualified accounts atyear-end 2016. (Nonqualified Deferred Compensation table, page 57).
For McAdam, these above-market earnings came on top of $424,000 in Company matching contributions to his Deferral Plan account and $21,200 to his Management Savings Plan account. (2017 Proxy, Compensation Tables). 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.” (2017 Proxy, page 45).
This $545,000 in total Company matching contributions and “above-market earnings” received by McAdamfor just one year dwarfed the maximum Company contribution available to employees participating only in the Savings Plan ($21,200). For McAdam, this is all on top of nearly $2.8 million in accumulated pension benefits under legacy plans frozen in 2006 (2017 Proxy, pages 50, 55).
Above-market earnings onnon-qualified accounts are not performance-based and thus do nothing to align management incentives with long-term shareholdershareholders’ interests. In addition, gross disparities between retirement benefits offered to senior executives and other employees risk potential morale problems and reputational risk.
PleaseVOTE FOR this proposal.
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| | | Our Board of Directors recommends that you vote against this
proposal for the following reasons:
|
The Board of Directors strongly opposes this proposal because it fundamentally misrepresents the investment returns paid to participants in Verizon’s Executive Deferral Plan, which we refer to as the Deferral Plan. The proponent’s claim that Verizon pays senior executives an “above-market” rate of return on their account balances in the Deferral Plan is just plain wrong. None of the 28 hypothetical investment options offered under the Deferral Plan pay a premium above what can be earned in the market. All but one of the hypothetical investment options simply mirror the performance of the investment options available under Verizon’stax-qualified64 401(k) savings plan. The one additional hypothetical investment option, which we refer to as the Moody’s investment option, offers a return equal to the long-term, high-grade corporate bond yield average as published by Moody’s Investor Services Inc. – in other words, a rate entirely reflective of today’s market rate for loans to large corporations such as Verizon. Verizon cannot offer the Moody’s investment option in the 401(k) savings plan because a hypothetical fund based on an index is not a permissible investment option under federal pension law, which requires that contributions into a 401(k) savings plan be invested in actual funds, such as mutual funds.
The proposal references the “above market” earnings that are reported in the summary compensation table of the proxy statement. These earnings relate to the amounts that the individuals elected to invest in the Moody’s investment option. These earnings are only required to be reported in the proxy statement because in 2004, when the Deferral Plan was adopted, the return on the Moody’s investment option exceeded a percentage of the then applicable federal long-term rate (as opposed to a market rate of return). In 2017, the annual rate of return on the Moody’s investment option was approximately 4.135%. Given that the S&P 500 Price index returned over 18% in 2017, it is unreasonable and unfair to characterize the returns on the Moody’s investment option as “preferential” or “above-market.” The Board believes that the hypothetical investment options offered under the Deferral Plan are market-based andnon-preferential. 2020 Proxy Statement
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Additional Information Additional Information about theAbout Our Annual Meeting Our Meeting detailsDetails Date and locationLocation Thursday, May 3, 20187, 2020 8:3045 a.m., local time Hyatt Regency Lake Washington at Seattle’s SouthportInterContinental San Diego
1053 Lake Washington Boulevard North901 Bayfront Court
Renton, Washington 98056San Diego, California 92101
Admission Only Verizon shareholders as of the record date, March 5, 2018,9, 2020, may attend the meeting.You will need an admission ticket or other proofto register in advance of stock ownership as well asthe meeting and bring valid photo identification to be admitted.Registration requests must be received no later than May 4, 2020 and may be sent by email to legalproxy@computershare.com or by mail to: Computershare Verizon Legal Proxy P.O. Box 43001 Providence, RI 02940-3001 If you are a registered shareholder, an admission ticket is attached toyour request must include your15-digit control number included on your proxy card, or Notice of Internet Availability, of Proxy Materials, or the email you received providing access to the proxy materials and online voting website, and a phone number and/or email address where you 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.reached. If you hold your shares in the name of a bank, broker or other institution, your request must include your name and a phone number and/or email address where you may obtain an admission ticket atbe reached. On the day of the meeting, by presenting proofyou must present your Notice of your ownership of Verizon common stock. For example, you may bring your account statementInternet Availability, voting instruction form or a letter from your bank or broker confirming that you owned Verizon common stock on March 5, 2018,9, 2020, the record date for the meeting.meeting, to be granted admission. The Hyatt Regencymeeting facility 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”Us” no later than April 13, 2018.17, 2020. 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 20172019 Annual Report are available atwww.edocumentview.com/vz. If you are a registered holder, you can also view or download these materials when you vote online atwww.envisionreports.com/vz. | | | Verizon 2018 Proxy Statement| | | 71 |
Verizon 2020 Proxy Statement 65
Additional Information| Our Voting proceduresProcedures and resultsResults Our Voting proceduresProcedures and resultsResults Who may vote? Shareholders of record as of the close of business on March 5, 2018,9, 2020, the record date, may vote at the meeting. As of March 5, 2018,9, 2020, there were approximately 4.134.14 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: | | | 
 | | Online Go towww.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. | 
| |  | | Phone Call toll-free1-800-652-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. | 
| |  | | 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. | 
| |  | | 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. |
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 April 30, 2018.May 4, 2020. 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? The Board is soliciting your proxy. 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. You may also abstain from voting. Your proxy provides voting instructions for all Verizon shares that are registered in your name on March 5, 20189, 2020 and all shares that you hold in a current or former Verizon savings plan or in your Verizon Direct InvestStock Purchase and Dividend Reinvestment Plan account. | | | 72 | | |Verizon 2018 Proxy Statement |
66Verizon 2020 Proxy Statement
Additional Information| Our Voting proceduresProcedures and resultsResults 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 advisory vote to approve executive compensation, and in favor of the ratification of the independent registered public accounting firm, and in favor of the advisory vote to approve executive compensation.firm. 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 Assistant Corporate Secretary at the address given under “Contacting Verizon.Us.” 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.Us.” 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.Us.” 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 April 30, 2018.May 4, 2020. Street name shares. If you hold your shares through a bank, broker or other institution, pleaseyou can change your voting instructions for those shares by voting again online or by telephone. Please check with that firm for additional 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. 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. AbstentionsAbstentions.. 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.
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. Brokernon-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. Verizon 2020 Proxy Statement 67
Additional Information Proxy Materials 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. | | | Verizon 2018 Proxy Statement| | | 73 |
Additional Information |Voting procedures and results
Where can I find the voting results of the annual meeting? We will report the voting results on a Current Report on Form8-K filed with the SEC no later than May 9, 2018.13, 2020. We will also post the voting results on the Corporate Governance section of our website atwww.verizon.com/about/investorsinvestors/corporate-governance 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 materialsMaterials May I receive my materials electronically? We encourage registered shareholders to sign up for electronic delivery of future proxy materials. You may sign up when you vote online atwww.envisionreports.com/vz. If you have enrolled in Computershare’s Investor Center, you may sign up by accessing your account atwww.computershare.com/verizon and clicking on “My Profile” and then “Communication Preference.Preferences.” 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 accessing your account through Computershare’s Investor Center atwww.computershare.com/verizon and clicking on “My Profile” and then “Communication Preference.Preferences.” 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.Us.” 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.Us.” Householding does not apply to shareholders who have signed up for electronic delivery of 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: You and another member of your household are both registered shareholders; You are a registered shareholder and also hold shares through a bank, broker or other institution; You hold shares through more than one bank, broker or other institution; or You and another member of your household hold shares through different banks, brokers or institutions. 68Verizon 2020 Proxy Statement
Additional Information Shareholder Proposals 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. | | | 74 | | |Verizon 2018 Proxy Statement |
Additional Information |Proxy materials
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”Us” 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 Verizon’s proxy solicitor? Georgeson Inc.Innisfree M&A Incorporated is helping us distribute proxy materials and solicit votes for a base fee of $20,000,$30,000, 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 proposalsProposals How do I submit a shareholder proposal to be included in the proxy statement for next year’s annual meeting? Any shareholder may submit a proposal to be included in the proxy statement for the 20192021 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 19, 2018.23, 2020. 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. How do I nominate a Director to be included in the proxy statement for next year’s 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. Anyany shareholder or group of up to 20 shareholders who have maintained continuous qualifying ownership of at least 3% or more of Verizon’s outstanding common stock for at least the previous three years may include a specified number of Director nominees in our 2021 proxy materials. The bylaws require that the shareholder proponents: Notify us in writing between October 20, 201824, 2020 and November 19, 2018;23, 2020; and Provide the additional required information and comply with the other requirements contained in our bylaws. How do I otherwise nominate a Director or bring other business before next year’s annual meeting? Under our bylaws, a shareholder may nominate an individual to serve as a Director or bring other business before the 20192021 Annual Meeting of Shareholders. The bylaws require that the shareholder: Notify us in writing between January 3, 2019,7, 2021, and February 3, 2019;6, 2021; Include his or her name, record address and Verizon share ownership; Verizon 2020 Proxy Statement 69
Additional Information Shareholder Proposals 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 Update this information as of the record date and after any subsequent change. | | | Verizon 2018 Proxy Statement| | | 75 |
Additional Information |Shareholder proposals
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 proponent’s 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”Us” at least 48 hours prior to the meeting. | | | 76 | | |Verizon 2018 Proxy Statement |
70Verizon 2020 Proxy Statement
Contacting VerizonUs How to contactContact 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 Verizon’s transfer agentContact Our 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 505000 Louisville, Kentucky 40233-5000 By email: verizon@computershare.com | | By telephone: 1-800-631-2355 (U.S.) 1-866-725-6576 (International) Online: www.computershare.com/verizon |
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 19, 201823, 2020 | | | Verizon 2018 Proxy Statement| | | 77 |
Verizon 2020 Proxy Statement 71
Appendix A Related Dow Peer Information The following chart shows the companies included in the Related Dow Peers, as constituted on March 8, 2019, the date of the 2019 PSU grant. The chart includes each company’s market capitalization as of December 31, 2019, as reported by Bloomberg, as well as net income attributable to the company, revenue and total number of employees as of each company’s most recent fiscalyear-end as reported in SEC filings. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Company | | Market Capitalization ($ Millions) | | | Net Income
Attributable to
the Company ($ Millions) | | | Revenue ($ Millions) | | | Total Employees | | | | | | | | | | | | | | | | | | | 3M | | | $101,450 | | | | $4,570 | | | | $32,136 | | | | 96,163 | | | | | | |
| Verizon’s Rank
Among Related
Dow Peers (35 Companies) 13th Market Capitalization 5th Net Income 9th Revenue 15th Total Employees |
| | | | | American Express | | | $101,867 | | | | $6,759 | | | | $47,020 | | | | 64,500 | | Apple | | | $1,304,765 | | | | $55,256 | | | | $260,174 | | | | 137,000 | | AT&T | | | $285,479 | | | | $13,903 | | | | $181,193 | | | | 247,800 | | Boeing | | | $183,335 | | | | ($636 | ) | | | $76,559 | | | | 161,100 | | Caterpillar | | | $81,617 | | | | $6,093 | | | | $53,800 | | | | 102,300 | | Charter Communications | | | $119,544 | | | | $1,668 | | | | $45,764 | | | | 95,100 | | Chevron | | | $227,869 | | | | $2,924 | | | | $139,865 | | | | 48,200 | | Cisco Systems | | | $203,459 | | | | $11,621 | | | | $51,904 | | | | 75,900 | | Coca-Cola | | | $237,147 | | | | $8,920 | | | | $37,266 | | | | 86,200 | | Comcast | | | $204,580 | | | | $13,057 | | | | $108,942 | | | | 190,000 | | Dow* | | | $40,676 | | | | ($1,359 | ) | | | $42,951 | | | | 36,500 | | Exxon Mobil | | | $295,247 | | | | $14,340 | | | | $255,583 | | | | 74,900 | | Goldman Sachs Group | | | $84,773 | | | | $8,466 | | | | $53,922 | | | | 38,300 | | Home Depot | | | $238,216 | | | | $11,242 | | | | $110,225 | | | | 400,000 | | IBM | | | $118,711 | | | | $9,431 | | | | $77,147 | | | | 352,600 | | Intel | | | $260,348 | | | | $21,048 | | | | $71,965 | | | | 110,800 | | | | | | | | | | Johnson & Johnson | | | $383,911 | | | | $15,119 | | | | $82,059 | | | | 132,200 | | | | | | | | | | | | | | | | | | | | | | JPMorgan Chase | | | $437,226 | | | | $36,431 | | | | $142,422 | | | | 256,981 | | | | | | | | | | | | | | | | | | | | | | McDonald’s | | | $148,819 | | | | $6,025 | | | | $21,077 | | | | 205,000 | | | | | | | | | | | | | | | | | | | | | | Merck | | | $231,557 | | | | $9,843 | | | | $46,840 | | | | 71,000 | | | | | | | | | | | | | | | | | | | | | | Microsoft | | | $1,203,063 | | | | $39,240 | | | | $125,843 | | | | 144,000 | | | | | | | | | | | | | | | | | | | | | | Nike | | | $158,150 | | | | $4,029 | | | | $39,117 | | | | 76,700 | | | | | | | | | | | | | | | | | | | | | | Pfizer | | | $216,827 | | | | $16,273 | | | | $51,750 | | | | 88,300 | | | | | | | | | | | | | | | | | | | | | | Procter & Gamble | | | $311,477 | | | | $3,897 | | | | $67,684 | | | | 97,000 | | | | | | | | | | | | | | | | | | | | | | Sprint Corporation | | | $21,397 | | | | ($1,943 | ) | | | $33,600 | | | | 28,500 | | | | | | | | | | | | | | | | | | | | | | T-Mobile US | | | $67,094 | | | | $3,468 | | | | $44,998 | | | | 53,000 | | | | | | | | | | | | | | | | | | | | | | Travelers | | | $35,349 | | | | $2,622 | | | | $31,581 | | | | 30,800 | | | | | | | | | | | | | | | | | | | | | | UnitedHealth Group | | | $278,521 | | | | $13,839 | | | | $242,155 | | | | 325,000 | | | | | | | | | | | | | | | | | | | | | | United Technologies | | | $129,283 | | | | $5,537 | | | | $77,046 | | | | 243,200 | | | | | | | | | | | | | | | | | | | | | | VISA | | | $369,878 | | | | $12,080 | | | | $22,977 | | | | 19,500 | | | | | | | | | | | | | | | | | | | | | | Walgreens Boots Alliance | | | $52,356 | | | | $3,982 | | | | $136,866 | | | | 342,000 | | | | | | | | | | | | | | | | | | | | | | Walmart | | | $337,170 | | | | $14,881 | | | | $523,964 | | | | 2,200,000 | | | | | | | | | | | | | | | | | | | | | | Walt Disney | | | $260,681 | | | | $11,054 | | | | $69,570 | | | | 223,000 | | | | | | | | | | | | | | | | | | | | | | Verizon | | | $253,937 | | | | $19,265 | | | | $131,868 | | | | 135,000 | | | | | | | | | | | | | |
| * | Dow replaced DowDuPont following Dow’s separation from DowDuPont in April 2019. |
Verizon 2020 Proxy Statement
Appendix B Reconciliation ofNon-GAAP Measures Verizon Communications Inc.Adjusted EPS Reconciliation of Non-GAAP Measures
| | | | | | | | | | Years Ended December 31, | | 2018 | | | 2019 | | Reported EPS | | $ | 3.76 | | | $ | 4.65 | | Severance, Pension and Benefit Charges | | | 0.01 | | | | 0.06 | | Early Debt Redemption Costs | | | 0.13 | | | | 0.64 | | Acquisition and Integration Related Costs | | | 0.10 | | | | — | | Product Realignment | | | 0.12 | | | | — | | Impairment Charges | | | 1.10 | | | | 0.05 | | Wireless Legal Entity Restructuring | | | (0.50 | ) | | | — | | Tax Benefit from Sale of Preferred Stock | | | — | | | | (0.54 | ) | Net Gain from Dispositions of Assets and Businesses | | | — | | | | (0.05 | ) | | | | | | Adjusted EPS* | | $ | 4.71 | | | $ | 4.81 | | | | | | | Less: Impact of Revenue Recognition Standard(1) | | | (0.10 | ) | | | — | | | | | | | Adjusted EPS for Compensation Purposes | | $ | 4.61 | | | $ | 4.81 | | | | | | |
| | | Adjusted Net Income Reconciliation
| (1) | (dollars in billions)
| Year Ended December 31,
| | 2017
Incremental amount not contemplated when target was set. |
| | | | | Reported Net Income Attributable to Verizon | | $ | 30.1 | | Severance, Pension and Benefit Charges | | | 0.9 | | Early Debt Redemption Costs | | | 1.2 | | Acquisition and Integration Related Costs | | | 0.5 | | Product Realignment | | | 0.5 | | Gain on Spectrum License Transactions | | | (0.2 | ) | Net Gain on Sale of Divested Businesses | | | (0.9 | ) | Impact of Tax Reform | | | (16.8 | ) | | | | | | Adjusted Net Income Attributable to Verizon | | $ | 15.3 | | | | | | | Controlling Interest Income due to Wireless Transaction | | | (7.0 | ) | Wireless Transaction Costs | | | 1.4 | | | | | | | Adjusted Net Income excluding Wireless Transaction Impact | | | 9.7 | | | | | | |
| * | May not add due to rounding. |
Note: Adjusted Net Income Attributable to Verizon excluding Wireless Transaction Impact includes adjustmentsFree Cash Flow Reconciliation 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).Short-Term Incentive Plan
| | | | | | | | | | Year Ended December 31, | | (dollars in billions)
2019 | | Net Cash Provided by Operating Activities | | | | | | $ | 35.7 | | Net Cash Provided by Device Installment Receivable Securitizations | | | | | | | 2.3 | | Net Cash Used for Discretionary Pension Plan Contribution(1) | | | | | | | 0.2 | | Less: Capital Expenditures (including capitalized software) | | | | | | | (17.9 | ) | | | | | | | | | | Adjusted Free Cash Flow for Short-Term Incentive Plan | | | | | | $ | 20.3 | | | | | | | | | | |
| | | | | | | | | Adjusted EPS Reconciliation Years Ended December 31, | | 2016 | | | 2017 | | Reported EPS | | $ | 3.21 | | | $ | 7.36 | | Severance, Pension and Benefit Charges | | | 0.44 | | | | 0.21 | | Early Debt Redemption Costs | | | 0.27 | | | | 0.29 | | Acquisition and Integration Related Costs | | | — | | | | 0.13 | | Product Realignment | | | — | | | | 0.11 | | Gain on Spectrum License Transactions | | | (0.02 | ) | | | (0.04 | ) | Net Gain on Sale of Divested Businesses | | | (0.03 | ) | | | (0.23 | ) | Impact of Tax Reform | | | — | | | | (4.10 | ) | | | | | | | | | | Adjusted EPS | | $ | 3.87 | | | $ | 3.74 | | | | | | | | | | |
| (1) | Not contemplated when target was set. |
Note: EPS mayFree Cash Flow Reconciliation for Long-Term Incentive Plan
| | | | | | | | | | | | | | | | (dollars in billions) | | | Year Ended December 31, | | 2017 | | | 2018 | | | 2019 | | Net Cash Provided by Operating Activities(1) | | $ | 25.3 | | | $ | 34.3 | | | $ | 35.7 | | Net Cash Provided by Device Installment Receivable Securitizations | | | 4.7 | | | | 1.4 | | | | 2.3 | | Net Cash Used for (Provided by) Discretionary Pension Plan Contribution(2)(3) | | | 2.1 | | | | 0.1 | | | | (0.9 | ) | Additional Cash Provided from Tax Reform(2) | | | | | | | (3.9 | ) | | | (3.7 | ) | Less: Capital Expenditures (including capitalized software) | | | (17.2 | ) | | | (16.7 | ) | | | (17.9 | ) | | | | | | Adjusted Free Cash Flow for Long-Term Incentive Plan* | | $ | 14.9 | | | $ | 15.3 | | | $ | 15.5 | | | | | | |
| (1) | In the Company’s Consolidated Statements of Cash Flows for the year ended December 31, 2018, the Net Cash Provided by Operating Activities for 2017 was recast to reflect accounting changes relating to cash flow presentation which were adopted in 2018. The amount for 2017 is the amount prior to the recast. The change in presentation had no impact on the targets or the results for the awards under the Long-Term Plan. |
| (2) | Not contemplated when target was set. |
| (3) | 2018 amount also includes contributions to the 401(h) separate account. |
| * | May not add due to rounding. | | | Free Cash Flow Reconciliation for Short-Term Incentive Plan
| | (dollars in billions)
|
| | | | | Year Ended December 31, | | 2017 | | Net Cash Provided by Operating Activities | | $ | 25.3 | | Net Cash Provided by Device Installment Receivable Securitizations | | | 4.7 | | Net Cash Used for Discretionary Pension Contribution | | | 2.1 | | Less: Capital Expenditures (including capitalized software) | | | 17.2 | | | | | | | Adjusted Free Cash Flow Inclusive of Device Installment Receivable Securitizations | | $ | 14.9 | | | | | | |
| | | | | | | | | | | | | Free Cash Flow Reconciliation for Long-Term Incentive Plan | | (dollars in billions) | | Year Ended December 31, | | 2015 | | | 2016 | | | 2017 | | Net Cash Provided by Operating Activities | | $ | 38.9 | | | $ | 22.7 | | | $ | 25.3 | | Net Cash Provided by Device Installment Receivable Securitizations | | | — | | | | 5.0 | | | | 4.7 | | Net Cash Used for Discretionary Pension Contribution | | | — | | | | — | | | | 2.1 | | Less: Capital Expenditures (including capitalized software) | | | 17.7 | | | | 17.1 | | | | 17.2 | | | | | | | | | | | | | | | Adjusted Free Cash Flow* | | $ | 21.2 | | | $ | 10.6 | | | $ | 14.9 | | | | | | | | | | | | | | |
* | May not add due to rounding. |
Note: Cumulative Adjusted Free Cash Flow represents the sum of the three years presented. Verizon 2020 Proxy Statement
| | | | | | | | | Adjusted Equity and Return on Equity (ROE) Reconciliation
| | (dollars
| |  | | | | Your vote matters – here’s how to vote! | | | | You may vote online or by phone instead of mailing this card. | | | |  | | Votes submitted electronically must be received by 8:45am, Pacific Daylight Time, on May 7, 2020. | | | |  | | Online Go towww.envisionreports.com/vz or scan the QR code – login details are located in billions) the shaded bar below. | | | | | 
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| | | | | Average Reported Equity | | $ | 27.0 | | Severance, Pension and Benefit Charges | | | 0.2 | | Early Debt Redemption Costs | | | 0.7 | | Acquisition and Integration Related Charges | | | 0.2 | | Product Realignment | | | — | | Gain on Spectrum License Transactions | | | (0.1 | ) | Net Gain on Sale of Divested Businesses | | | (0.7 | ) | Impact of Tax Reform | | | (1.3 | ) | | | | | | Average Reported Equity in accordance with the terms of the Short-Term Plan* | | $ | 26.0 | | Impact of Wireless Transaction | | | 19.0 | | | | | | | Average Adjusted Equity excluding Wireless Transaction Impact | | | 45.0 | | | | | | | Reported ROE %** | | | 115.7 | % | Reported ROE - Short-Term Plan %** | | | 58.8 | % | Adjusted ROE %** | | | 21.6 | % |
Note: Equity averages have been computed using the period-end balances for a thirteen-month period spanning from December 2016 to December 2017. 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 transaction to acquire sole ownership of Verizon Wireless and is also on a thirteen-month weighted average basis from December 2016 to December 2017.
q IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - * | May not add due to rounding. | | | | | | | | | A | | The Board of Directors recommends a voteFOR all the nominees listed, andFOR Proposals 2 and 3. |
** | Quotient may not compute due | | | | | | | | | | | | | | | | | | | | | | | | | | | | 1. Election of Directors: | | For | | Against | | Abstain | | | | For | | Against | | Abstain | | | | For | | Against | | Abstain | | | + | | | | 01 - Shellye L. Archambeau | | ☐ | | ☐ | | ☐ | | 02 - Mark T. Bertolini | | ☐ | | ☐ | | ☐ | | 03 - Vittorio Colao | | ☐ | | ☐ | | ☐ | | | | | | | | | | | | | | | | | 04 - Melanie L. Healey | | ☐ | | ☐ | | ☐ | | 05 - Clarence Otis, Jr. | | ☐ | | ☐ | | ☐ | | 06 - Daniel H. Schulman | | ☐ | | ☐ | | ☐ | | | | | | | | | | | | | | | | | | | | | 07 - Rodney E. Slater | | ☐ | | ☐ | | ☐ | | 08 - Hans E. Vestberg | | ☐ | | ☐ | | ☐ | | 09 - Gregory G. Weaver | | ☐ | | ☐ | | ☐ | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | For | | Against | | Abstain | | | | For | | Against | | Abstain | 2. Advisory Vote to rounding.Approve Executive Compensation | | ☐ | | ☐ | | ☐ | | 3. Ratification of Appointment of Independent Registered Public Accounting Firm | | ☐ | | ☐ | | ☐ |
| | | Adjusted Consolidated Total Revenue Reconciliation B
| | (dollars in billions)
| Year Ended December 31,
| | 2017
The Board of Directors recommends a voteAGAINST: |
| | | | | Consolidated Total Revenue | | $ | 126.0 | | Less: Operating Revenue from Acquisitions | | | (4.3 | ) | | | | | | Adjusted Consolidated Total Revenue* | | $ | 121.7 | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | For | | Against | | Abstain | | | | | | | | For | | Against | | Abstain | | | | | | | | For | | Against | | Abstain | | 4. | | Nonqualified Savings Plan Earnings | | ☐ | | ☐ | | ☐ | | | | 5. | | Special Shareholder Meetings | | ☐ | | ☐ | | ☐ | | | | 6. | | Lobbying Activities Report | | ☐ | | ☐ | | ☐ | | | | | | | | | | | | | | | | | | | 7. | | User Privacy Metric | | ☐ | | ☐ | | ☐ | | | | 8. | | Amend Severance Approval Policy | | ☐ | | ☐ | | ☐ | | | | | | | | | | | | |
* | May not add due | | | C | | Authorized Signatures – This section must be completed for your vote to rounding.be counted. – Date and Sign Below |
Sustainability at Verizon Verizon gives people the ability to do more through technology, investments and actions designed to educate the21st century workforce and promote environmental sustainability. We are taking action in support of the United Nation’s Sustainable Development Goals: Improving global resource efficiency Reducing carbon intensity: Verizon will deliver a lasting, positive impact on the environment by cutting our own carbon intensity – the carbon our business emits divided by the terabytes of data we transport over our networks – in half over the 2016 baseline by 2025. In addition, Verizon will implement an additional 24 megawatts of green energy by 2025, doubling our current green energy capacity. Supporting carbon abatement: Verizon’s products and services — ranging from high speed internet that allows people to work remotely, to smart grids that increase the efficiency of our power system, to telematics that improve fleet routing — help our customers use less energy, and therefore create fewer greenhouse gas emissions. By 2022, our networks and connected solutions will save more than double the amount of global emissions that our operations create. Supporting quality education Through the Verizon Innovative Learning initiative, we provide free technology, access and hands-on immersive learning in science, technology, engineering and math to students in need.To date, Verizon has reached one million students through these programs, and by 2023, we will help provide an additional fire million students with the skills required to put them on the path to success in an increasingly tech-dependent job market. 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 Verizon received an A- on the Carbon Disclosure Project’s 2017 evaluation and is ranked in CDP’s Leadership scoring band. CDP runs a global voluntary disclosure system by which companies and cities disclose their environmental impacts to inform marketplace decision-making. Verizon chairs 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. Verizon was named an EPA ENERGY STAR Partner of the Year for Sustained Excellence for the fifth consecutive year in 2017. Design by Addison www.addison.com
Giving humans the ability to do more in this world. We call it humanability. It’s why we’re partnering with visionaries from just about every industry you can imagine, using technology and data to turn innovative ideas into reality. Keeping the food chain safe How can a sensor the size of a nickel help stop food poisoning? With a combination of temperature monitoring, real-time alerts, and data collection and analytics, our Internet of Things sensors and our advanced network give businesses the competitive advantage of monitoring quality and providing transparency throughout the supply chain – while keeping people and the global food chain safer.
Using a black ink pen, mark your votes with an X as shown in this example. Please do not write outside the designated areas. X 02RFFC 1 P C F + Annual Meeting Proxy Card . IMPORTANT ANNUAL MEETING INFORMATION B The Board of Directors recommends a vote AGAINST: For Against Abstain 2. Ratification of Appointment of Independent Registered Public Accounting Firm For Against Abstain 3. Advisory Vote to Approve Executive Compensation + A The Board of Directors recommends a vote FOR all nominees and FOR Proposals 2 and 3. 01 - Shellye L. Archambeau 05 - M. Frances Keeth 09 - Kathryn A. Tesija 02 - Mark T. Bertolini 06 - Lowell C. McAdam 10 - Gregory D. Wasson 03 - Richard L. Carrión 07 - Clarence Otis, Jr. 11 - Gregory G. Weaver 1. Election of Directors: For Against Abstain For Against Abstain For Against Abstain 04 - Melanie L. Healey 08 - Rodney E. Slater For Against Abstain 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.
| | | | | | | | | | Date (mm/dd/yyyy) – Please print date below. | | | | Signature 1 – Please keep signature within the box. | | | | Signature 2 – Please keep signature within the box. | / / | | | | | | | | |
036LZI
Verizon Communications Inc. 2020 Annual Meeting of Shareholders May 7, 2020, 8:45 a.m. Local Time InterContinental San Diego 901 Bayfront Court San Diego, California 92101 If you plan to attend the box. Signature 2 Please keep signature within2020 Annual Meeting of Shareholders in person, you must register in advance. See page 65 of the box. For Against Abstain 4. Special Shareowner Meetings 7. Report on Cyber Security and Data Privacy For Against Abstain 5. Lobbying Activities Report 8. Executive Compensation Clawback Policy For Against Abstain 6. Independent Chair 9. Nonqualified Savings Plan Earnings MMMMMMMMMMMM MMMMMMMMMMMMMMM 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000004 MR A SAMPLE DESIGNATION (IF ANY) ADD 1 ADD 2 ADD 3 ADD 4 ADD 5 ADD 6 ENDORSEMENT_LINE SACKPACK 1234 5678 9012 345 MMMMMMM 3 6 5 8 6 8 1 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 MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MMMMMMMMM C 1234567890 J N T C123456789 Admission TicketProxy Statement for details. | | | | | | | |
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q IF YOU ARE VOTING BY MAIL, FOLD ALONG THE PERFORATION,SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. 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 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.q - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Notice of 20182020 Annual Meeting of Shareholders Proxy Solicited by the Board of Directors of Verizon Communications Inc. for the Annual Meeting of Shareholders, Thursday, May 3, 2018,7, 2020, 8:3045 a.m. Local Time Your signature on the reverse side of this card appoints each of Lowell C. McAdamHans E. Vestberg and William L. Horton, Jr. as proxies, each 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 proxiesproxy 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 theirthe proxy’s 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 InvestStock Purchase and Dividend Reinvestment 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 April 30, 2018. May 4, 2020. 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 April 30, 2018May 4, 2020 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. Verizon Communications Inc. 2018 Annual Meeting Admission Ticket May 3, 2018, 8:30 a.m. Local Time Hyatt Regency Lake Washington at Seattle’s Southport 1053 Lake Washington Boulevard North Renton, Washington 98056 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. |
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Committee Chair 
Audit Committee Financial Expert
