The Human Resources Committee of the Board is responsible for establishing and administering all policies and plans related to compensation and benefits for the senior management group, including the executives listed in the Summary Compensation Table beginning on page 23 of this Proxy Statement. The individuals listed in that table are referred to as the named executive officers. Specifically, the Committee has the direct responsibility to review and approve the corporate goals and objectives relevant to the senior management group compensation plans and programs and annually benchmarks the ongoing competitiveness of these plans and programs in order to evaluate whether they are achieving the desired goals and objectives summarized in this report. The Committee retains the services of an independent, outside consultant to assist it in performing its duties. The Committee reports to the Board of Directors on its actions and recommendations following every meeting, and periodically meets in executive session without members of management present. Members of the Committee are non-management directors who, the Board has determined, are independent as required by applicable laws and regulations, the listing standards of the New York Stock Exchange, and the Board’s Corporate Governance Guidelines.

This report summarizes the philosophy, structure, and compensation levels of the Company’s executive compensation programs for 2004.

PHILOSOPHY
The Committee oversees a compensation program that is designed to support Verizon’s long-term strategy and align the financial interests of the senior management group with Verizon’s shareholders. The Committee has established the following objectives for the Company’s executive compensation program:

• To attract, motivate and retain high-performing executive talent who drive Verizon’s success and industry leadership;
• To reward individuals who achieve key operational and financial goals and superior returns for shareholders;
• To provide a substantial portion of total compensation opportunity at risk, tied to both annual and long-term financial performance and strategic objectives.

The Committee evaluates and approves each component of compensation (base salary, annual incentives, and long-term incentives) and reviews and approves the individual total compensation for the senior management group. In considering the mix of elements comprising total compensation, the Committee has emphasized long-term pay and performance to stress the importance of achieving Verizon’s long-term goals.

Each of Verizon’s 2004 incentive compensation plans emphasizes a pay for performance philosophy and is designed to reflect both individual and company performance. They provide aggressive performance objectives that serve to both motivate and retain executives. The Verizon Short-Term Incentive Plan is designed to reward performance in achieving certain internal business goals that are primarily financial and operational in nature. When the Company’s performance is better than the objectives set for the performance period, employees receive higher payouts, and when the Company’s performance does not meet one or more of the key objectives, the employees receive lower payouts. The Verizon Long-Term Incentive Plan is designed to reward the creation of sustainable shareholder value and more closely align the interests of the Company’s senior management group with that of its shareholders. For 2004, the Committee determined that the senior management group’s long-term incentive compensation should consist of a mix of performance stock units and non-qualified stock options. These programs are designed to reward employees when shareholder value is created.

The total compensation of the senior management group has been set at levels that are intended to be competitive with market peers made up of other large, global, public companies with whom Verizon competes for executive talent. The Committee also benchmarks total direct compensation (base salary, annual cash bonus, and long-term equity awards) against an industry peer group of telecommunications, broadband, wireless and cable companies. The Committee has determined that the aggregate of Verizon’s base pay and short-term compensation opportunity should target the 50th percentile for market and industry peers and that its long-term incentive opportunities should target the third quartile. To ensure that Verizon’s senior management compensation is consistent with these levels, the Committee annually compares Verizon’s total compensation and component pay levels to those of its market and industry peer group companies.

The Company’s stock ownership guidelines encourage each executive to achieve and maintain an appropriate ownership stake in the Company. The ownership levels are based on base salary and require a multiple of at least five times base salary for the CEO and a multiple of at least one to four times for other executives. These guidelines apply to all senior management employees. All named executive officers are currently in compliance with the stock ownership guidelines. The table on page 29 shows the current ownership levels of these named executive officers.

The Committee also recognizes that, from time to time, it may be appropriate to enter into agreements with certain key executives to ensure that Verizon continues to retain their services. In general, these agreements provide the key executives with certain protection (in the form of severance pay) if they are involuntarily terminated or their employment with the Company ends prior to the time they would have otherwise elected to retire. The existing agreements with the named executive officers are described beginning on page 26 of this Proxy Statement. On June 30, 2004, the Company’s agreement with its Chairman and Chief Executive Officer, Ivan Seidenberg, expired pursuant to its terms. Based on market competitive practices, the Board has determined that a multi-year agreement is no longer necessary. Therefore, Mr. Seidenberg will no longer have an employment agreement.

COMPONENTS OF COMPENSATION
There are three components of the compensation structure for the senior management group: salary; a short-term incentive award paid in cash; and a long-term incentive award paid in cash. The majority of an executive’s total compensation is performance-based and, therefore, at risk because the value of such compensation (short-term and long-term incentives) depends largely on the degree of success in attaining both Company and individual performance objectives.

Salary. The Company’s executive salary structure is based on broad salary bands. Consideration of salary adjustments, if any, is based on a review of competitive market data relative to its market and industry peer group companies and individual performance. Base pay is set at the 50th percentile level of peer group companies. In 2004, the senior management group received salary increases based upon individual performance, market changes in the value of positions, and the economic and business conditions affecting Verizon at the time of the evaluation. The salaries earned by the named executive officers for 2004 are shown in column (c) of the Summary Compensation Table on page 23.

Short-Term Incentive. Senior managers are eligible to receive annual cash incentives under the Verizon Short-Term Incentive Plan. The plan is designed to support Verizon’s business and performance goals by placing a sizable percentage of annual cash compensation at risk if those goals are not achieved. The targeted value of the short-term incentive award is generally based on the recipient’s actual base salary multiplied by a percentage applicable to the recipient’s compensation band level. The percentage is determined based on the level of responsibilities of a particular job and on comparable positions within industry peer group companies. For 2004, the awards were adjusted based upon actual performance as measured against pre-established performance objectives. These objectives are based primarily upon financial measures, particularly earnings per share and revenue excluding the net impact of pension and post-retirement benefits. In addition, a portion of the award is also based upon two non-financial measures: customer service and diversity. The Committee evaluates Verizon’s performance on these measures against the performance of industry peers. Depending on Verizon’s and the individual’s performance, the awards can range from zero to two times the targeted award value. When the Company’s performance meets the pre-established performance objectives, employees generally receive short-term incentive payouts at their targeted levels. Correspondingly, when the Company’s performance is better than the pre-established performance objectives, employees generally receive payouts greater than the targeted levels and when the Company’s performance does not meet the pre-established performance objectives employees generally receive payouts lower than the targeted levels. Verizon produced strong 2004 financial results driven by Wireless revenue growth, solid cash flow and increased margins. Also, in 2004, Verizon led its industry peer group companies in virtually every significant financial category and was able to significantly reduce its total debt. The Committee approved a performance percentage payout for each business segment (corporate, wireless, domestic telecom, international and information services), according to that business segment’s contribution to the Company’s overall performance. The performance percentages were used to determine the short-term incentive award for the named executive officers and other senior managers, according to their respective responsibilities and individual contribution. The amounts shown under “Bonus” in column (d) of the Summary Compensation Table represent the short-term incentive payments awarded to each of the named executive officers for 2004.

Long-Term Incentive. The Company provides long-term incentive opportunities under the Verizon Long-Term Incentive Plan. These long-term incentives may include non-qualified stock options, incentive stock options, performance stock units, restricted stock grants and stock appreciation rights. For 2004, long-term incentive compensation consisted of a mix of performance stock units and non-qualified stock options. This mix closely aligns the interests of the Company’s senior management group with the interests of its shareholders because of the focus on external performance measures, stock price and relative total shareholder return. The amount of the long-term incentive award granted to a particular employee is generally based on the recipient’s actual base salary multiplied by a percentage applicable to the recipient’s compensation band level. The percentage is determined based on the level of responsibilities of a particular job and on comparable positions within industry peer group companies.

In 2004, 60% of an employee’s long-term incentive compensation opportunity was granted in the form of Performance Stock Units. Performance stock units represent shares of Verizon stock that may become payable in cash after the completion of a three-year performance cycle. Actual payment of the performance stock units will be determined based on Verizon’s Total Shareholder Return (TSR) relative to the TSR of the companies that make up the Standard & Poor’s 500 and to the TSR of Verizon’s telecommunications, broadband, wireless and cable industry peer group companies. No performance stock units will be paid unless Verizon’s relative TSR position meets a specific minimum threshold percentage at the conclusion of the performance cycle. The value of the award may increase or decrease based on Verizon’s relative TSR position compared to that of the companies in the Standard & Poor’s 500 and the companies in Verizon’s industry peer group. The value of each performance stock unit is equal to the fair market value of a share of Verizon’s common stock on the date of the grant and will change as the value of Verizon’s common stock changes. The value of the performance stock units granted to each of the named executive officers is shown in column (f) of the Summary Compensation Table.

In 2004, 40% of an employee’s long-term incentive compensation opportunity was granted in the form of non-qualified stock options. All stock options are granted with an exercise price equal to the fair market value of Verizon’s stock on the date of the grant and are not transferable during the recipient’s lifetime. All stock options granted have a term of ten years and vest in equal installments on the first, second, and third anniversaries of the grant date. As it did in 2003, Verizon expensed its stock options granted in 2004. Verizon began expensing the fair market value of stock options granted on or after January 1, 2003. The number of stock options granted to each of the named executive officers is shown in column (g) of the Summary Compensation Table.

SUMMARY OF EXECUTIVE COMPENSATION CHANGES FOR 2005
In January 2005, the independent members of the Board of Directors changed Mr. Seidenberg’s compensation structure to align it with the changes made by the Human Resources Committee to the compensation structure for members of the senior management group in light of the increasing competition in the telecommunications industry, Verizon’s business strategy and in recognition of shareholder interests and corporate responsibility.

Effective January 1, 2005, the Committee eliminated the nonqualified supplemental retirement benefit under the Verizon Income Deferral Plan (IDP). The IDP provided a guaranteed pension credit to all senior managers in an amount equal to 32% of annual pay that was in excess of the IRS compensation limits. This retirement credit under the IDP has been replaced by the Verizon Excess Pension Plan, a nonqualified pension plan that provides pension credits that range from 4%-7%; on compensation that exceeds the IRS compensation limits. This is the same pay-credit percentage range received by all other management employees who participate in the Verizon Management Pension Plan and the Verizon Excess Pension Plan.

In addition, the value of the long-term incentive awards for Verizon’s senior management group was adjusted for the first time since 2000 to reflect market competitive levels. The 2005 long-term incentive grants will be made in the form of performance stock units and restricted stock units to further link rewards to Verizon’s financial performance and to increase in shareholder value. Stock options have not been granted to senior managers for 2005.

The executive flexible spending allowance for senior managers was also eliminated, effective as of January 1, 2005, and the Committee took this into account in assessing the changes to compensation structure.

These changes were made to further align the senior management group with the performance of Verizon’s stock by rewarding senior managers who drive marketplace success, provide outstanding industry leadership and increase shareholder value. Depending on the level of a senior manager, a minimum of 63% and up to 88% of total compensation for 2005 will be performance-based and, therefore, at risk. This represents an increase over 2004 levels by 8%. The value of short-term and long-term incentives will depend on the degree of success in attaining both Company and individual performance objectives, thus, emphasizing the Company’s pay for performance philosophy.

2004 COMPENSATION FOR IVAN SEIDENBERG
Mr. Ivan Seidenberg is Chairman and Chief Executive Officer of Verizon. In 2004, under Mr. Seidenberg’s leadership, the Company achieved a sizable increase in shareholder value while also continuing to significantly reduce its total debt. 2004 was also an extremely strong year of outstanding growth in the wireless and broadband business groups. The Company demonstrated an ability to grow and build market share in a highly competitive environment. Mr. Seidenberg’s 2004 compensation was determined in accordance with the plans and policies discussed in this report. His annual salary is shown in column (c) of the Summary Compensation Table, and his short-term incentive award is shown under “Bonus” in column (d) of this table.

For 2004, Mr. Seidenberg was eligible for a short-term incentive award ranging from $0 to $3,750,000. In 2004, Verizon changed its growth profile by divesting non-strategic assets, by extending its industry leadership in wireless, and by gaining momentum in broadband, long-distance and Enterprise markets. Revenues increased 5.7%, driven by 23% revenue growth at Verizon Wireless. During the year, Verizon added 6.3 million net new customers in Wireless, as its total number of customers grew nearly 17% to 43.8 million. In its Wireline business, Verizon added 1.2 million net new DSL customers for a total of 3.6 million DSL lines in service at the end of 2004. Verizon generated $21.8 billion of cash from operations. Total debt was reduced by $6.1 billion, finishing the year at $39.3 billion. Based on these results compared to the objectives established at the beginning of the year, Mr. Seidenberg received a 2004 short-term incentive award of $3,375,000 in recognition of the Company’s performance and his role in driving Verizon’s outstanding results.

Mr. Seidenberg’s 2004 long-term incentive award was maintained at its 2003 level of $10.5 million, which represented a more than 10% reduction from its 2002 and 2001 levels of $12 million. As a result, on February 4, 2004, Mr. Seidenberg received 171,429 PSUs and 468,227 stock options. The option grant is reported in column (g) of the Summary Compensation Table. The PSU grant dollar value is reported in column (f) of the Summary Compensation Table.

The independent members of the Board approved the first increase in five years to Mr. Seidenberg’s salary, reflecting the company’s success in creating growth and building market share in a highly competitive environment. Mr. Seidenberg’s salary increased $600,000, from $1,500,000 to $2,100,000. His new base salary was determined based on his individual performance in 2004, market changes in the value of his position since 2000, and the economic and business conditions affecting Verizon. His new base salary is in alignment with the base salary levels of other chief executive officers at other large global public companies comparable to Verizon. This new salary will be reflected in the summary compensation table in Verizon’s 2006 proxy statement.

Mr. Seidenberg will no longer participate in the nonqualified supplemental retirement benefit under the Income Deferral Plan (IDP), which provided him a guaranteed annual pension credit in an amount equal to 32% of his pay. This retirement credit under the IDP has been replaced by the Verizon Excess Pension Plan, which is a nonqualified pension plan that provides pension credits that range from 4%-7% (depending on age and service), on compensation that exceeds the IRS compensation limits. This is the same pay-credit percentage range received by all other management employees who participate in the Verizon Management Pension Plan and the Verizon Excess Pension Plan. In addition, Mr. Seidenberg will no longer receive an executive flexible spending allowance.

APPLICABLE TAX CODE PROVISION
Under the Omnibus Budget Reconciliation Act of 1993, provisions were added to the Internal Revenue Code under Section 162(m) that limit the tax deduction for compensation in excess of one million dollars paid to certain executive officers. Companies are permitted to exclude performance-based compensation from the limit if that compensation meets certain requirements. The Committee believes that the short and long-term plans are performance driven and therefore satisfy the requirements for exemption under Internal Revenue Code Section 162(m). However, under certain circumstances, the Committee will exercise its discretion to make certain grants and awards that may not comply with the terms and conditions under Section 162(m) of the Internal Revenue Code in order to maintain the Committee’s flexibility to grant awards that will continue to attract and retain qualified executives.

Respectfully submitted,

    Human Resources Committee

Dated: March 4, 2005