Proxy Blog

Verizon Communications Inc. 

April 6, 2020

The annual proxy for this communications company had the following proposals: 

  1. Proforma votes on directors, the appointment of auditors, and executive compensation 
  2. Shareholder proposals on savings planthreshold for special meetings, lobbying activities report, user privacy metrics, and severance approval policy 

Magni voted as follows: 

  1. For proforma proposals.
    -Directors – The board has a majority of independent directors and some have CEO/CFO experience with other companies. The compensation of directors is disclosed with a meaningful portion in equity where the equity has restrictions to align director incentives with long-term value creation. 
    -Auditors – There appear to be no controversies with the financial statements of the company.
    -“Say-on-pay” advisory vote – The disclosure related to the shareholder engagement program was adequate. The peer group was listed, and the company was benchmarked against the peer group. The criteria for the peer group was adequate. 
  2. For and against shareholder proposals
    -Against savings plan – the proposal seeks to limit compensation to senior executives. The supporting statement makes factual errors. Further, the company compensation plans seem consistent with other companies.
    -For lowering the threshold for special meetings – Per the Magni position paper, Magni routinely votes in favor of these proposals.
    -Against report on lobbying activities – The company already provides good disclosures of lobbying activities. This proposal seeks to lump industry group activities with political activities. There are good reasons for a company to participate in an industry group. Many of those reasons are unrelated to lobbying. Assuming all such industry activity as political is wrong.
    -Against user privacy metrics – This topic is difficult. The shareholder making the proposal makes good points about privacy. The challenge is the proposed remedies: (1) some undefined privacy metric and (2) integration of said metric into executive compensation. If the proposal involved greater disclosure and had a preferred privacy policy, then Magni would have been inclined to support the proposal.
    -Against severance approval policy  As with the prior topic, the underlying desire of the shareholder making the proposal is good; however, the proposal has elements that warrant a vote against the proposal. Two specific parts of the proposal are problematic: (1) the inclusion of very specific criteria as proscriptive requirements with hard limits may have unintended consequences and (2) a general micromanagement of the company from the shareholders that is not healthy.