Patrick O’Meara, corporate finance specialist in the AFL-CIO Office of Investment, updates us on recent shareholder action at Verizon by union members and retirees. 

Union members and retirees continue to challenge Verizon to become a better company. Sporting red T-shirts, some 50 current and retired members of the Communications Workers of America (CWA) and the Electrical Workers (IBEW), including members of the Association of BellTel Retirees, traveled to Lincoln, Neb., last week for the annual Verizon shareholders meeting.

The shareholder activists carried ballot boxes filled with proxies in support of this year’s proposal: Separating the positions of chief executive officer (CEO) and chairman of the board of directors. One of the main jobs of the board of directors is to objectively evaluate the performance of the CEO and the direction he or she seeks to take the company to make that direction benefit shareholders. It is not difficult to see that a board led by a chairman who also is the CEO, as is Ivan Seidenberg, may lack the objectivity needed to accomplish this essential task.

IBEW Local 2321 Business Manager Ed Starr puts it this way:

Ivan Seidenberg is now both Chairman and CEO. How can he be his own boss?

In fact, numerous studies have confirmed that companies that separate these two positions do perform better than companies that do not.

The proposal did not pass this year and the current management and directors at Verizon do not yet appear ready to change Verizon’s bylaws to embody best practices regarding this issue. But the union members and retirees say they are not disheartened and likely will be back next year to continue the tradition of educating other shareholders and pressing the company to move in the right direction. 

Last year, in Pittsburgh, a majority of Verizon shareholders supported a retiree-sponsored “Say on Pay” proposal to give shareholders a chance to voice their opinion on the compensation packages of the company’s top executives. The board of directors agreed to implement this proposal starting in 2009, making Verizon a pioneer in best corporate governance practices in at least one respect. 

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