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Item 4 on Proxy Card:
United Brotherhood of Carpenters and Joiners of America,
101 Constitution Avenue, N.W., Washington, DC 20001,
owner of 45,100 shares of the Company’s common
stock, proposes the following:
RESOLVED: That the shareholders of
Verizon Communications, Inc. (“Company”)
hereby request that the Board of Directors initiate
the appropriate process to amend the Company’s
governance documents (certificate of incorporation or
bylaws) to provide that director nominees shall be elected
by the affirmative vote of the majority of votes cast
at an annual meeting of shareholders.
SUPPORTING STATEMENT: Our Company
is incorporated in Delaware. Among other issues, Delaware
corporate law addresses the issue of the level of voting
support necessary for a specific action, such as the
election of corporate directors. Delaware law provides
that a company’s certificate of incorporation
or bylaws may specify the number of votes that shall
be necessary for the transaction of any business, including
the election of directors. (DGCL, Title 8, Chapter 1,
Subchapter VII, Section 216). Further, the law provides
that if the level of voting support necessary for a
specific action is not specified in the certificate
of incorporation or bylaws of the corporation, directors
“shall be elected by a plurality of the votes
of the shares present in person or represented by proxy
at the meeting and entitled to vote on the election
of directors.”
Our Company presently uses the plurality vote standard
for the election of directors. We feel that it is appropriate
and timely for the Board to initiate a change in the
Company’s director election vote standard. Specifically,
this shareholder proposal urges that the Board of Directors
initiate a change to the director election vote standard
to provide that in director elections a majority vote
standard will be used in lieu of the Company’s
current plurality vote standard. Specifically, the new
standard should provide that nominees for the board
of directors must receive a majority of the vote cast
in order to be elected or re-elected to the Board.
Under the Company’s current plurality vote standard,
a director nominee in a director election can be elected
or re-elected with as little as a single affirmative
vote, even while a substantial majority of the votes
cast are “withheld” from that director nominee.
So even if 99.99% of the shares “withhold”
authority to vote for a candidate or all the candidates,
a 0.01% “for” vote results in the candidate’s
election or re-election to the board. The proposed majority
vote standard would require that a director receive
a majority of the vote cast in order to be elected to
the Board.
It is our contention that the proposed majority vote
standard for corporate board elections is a fair standard
that will strengthen the Company’s governance
and the Board. Our proposal is not intended to limit
the judgment of the Board in crafting the requested
governance change. For instance, the Board should address
the status of incumbent directors who fail to receive
a majority vote when standing for re-election under
a majority vote standard or whether a plurality director
election standard is appropriate in contested elections.
We urge your support of this important director election
reform.
BOARD OF DIRECTORS’ POSITION
The Company’s directors, like those of most other
major public corporations, are elected by a plurality
of votes cast at the annual meeting. The Board of Directors
believes that the present system of electing directors
best serves the interests of all shareholders.
The Board strongly disagrees with the proponent’s
assertion that implementation of a majority vote standard
will strengthen the Company’s governance and the
Board. The Company already has in place a robust corporate
governance process designed to identify and propose
director nominees who will serve the best interests
of the Company and our shareholders. The Corporate Governance
Committee, which is composed solely of independent directors,
evaluates and recommends director nominees for election.
In order to be considered, nominees must meet specified
criteria designed to ensure that our Board members are
highly qualified and reflect a diversity of experience
and viewpoints. In addition, shareholders may recommend
candidates for election, as described in this Proxy
Statement under the heading, “Structure and Practices
of the Board of Directors — Nomination of Candidates
for Director.” The Company’s shareholders
have a history of electing strong and independent Boards,
not only by a plurality, but also in fact by a substantial
majority of the votes cast.
The Board believes that the proponent’s characterization
of the plurality voting process — in particular
the suggestion that a director may be elected even if
99.99% of the votes casts are “withheld”
— is highly theoretical and not supported by historic
results.
Implementation of this proposal would unnecessarily
complicate the election of directors. Under Delaware
law, each incumbent director serves until a successor
is elected and qualified for his or her position. Accordingly,
if the proposal were adopted and implemented, any incumbent
director who did not receive a majority of the votes
cast would nonetheless continue to serve as director
until his or her successor is elected by a subsequent
vote of shareholders. In addition, if any other nominee
does not receive a majority of votes cast, the resulting
vacancy could be filled with a successor designated
by the Board of Directors.
For the foregoing reasons, the Board believes that
requiring a majority vote for the election of directors
is not in the best interests of the Company and its
shareholders.
The Board of Directors recommends a vote AGAINST
this proposal.
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