VERIZON COMMUNICATIONS INC. | Vote to amend clawback policy at Verizon Communications Inc.

Status
AGM passed
AGM date
Previous AGM date
Proposal number
6
Resolution details
Company ticker
VZ
Lead filer
Individual
Resolution ask
Adopt or amend a policy
ESG theme
  • Governance
ESG sub-theme
  • Remuneration or pay
Type of vote
Shareholder proposal
Filer type
Shareholder
Company sector
Telecom
Company HQ country
United States
Resolved clause
RESOLVED: Verizon shareholders urge our Board of Directors to amend the CompanyÕs Senior Executive Clawback Policy to state that ÒconductÓ Ð not Òwillful misconductÓ Ð may trigger application of that 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 compensation paid, granted or awarded to a senior executive. These amendments should operate prospectively and be implemented so as not to violate any contract, compensation plan, law or regulation.

Supporting statement
Supporting statement: VerizonÕs current policy allows the company to cancel or Òclaw backÓ the cash and equity-based compensation of senior executives who engage in Òwillful misconduct . . . that results in significant reputational or financial harm to Verizon.Ó A clawback for conduct other than Òwillful misconduct,Ó including even Ògross negligence,Ó is considered only when it results in a restatement of financial results.
Because VerizonÕs clawback policy focuses on Òwillful misconductÓ and does not require disclosure to shareholders, we believe it is too narrow, too vague, and does not address situations where an executive fails to exercise oversight responsibilities that result in significant financial or reputational damage to Verizon. It should.
A new clawback policy based on Òconduct,Ó not Òwillful misconduct,Ó is consistent with the 2022 rule adopted by the Securities and Exchange Commission that requires companies to claw back erroneously awarded incentive compensation based on erroneous financial statementsÐ even when there is no misconduct.
Clawbacks at McDonaldÕs, CBS, UnitedHealth Group and Wells Fargo offer prime examples of why Verizon needs a stronger policy. After Congressional hearings in 2016, Wells Fargo agreed to pay $185 million to resolve claims of fraudulent sales practices. Wells Fargo concluded the CEO had turned a blind eye to the practice of opening fraudulent accounts without customer consent. Wells FargoÕs board then clawed back $136 million from two top executives based on a policy of the sort we propose here.
Like Wells Fargo, Verizon is a consumer-facing company with significant exposure to reputational and financial harm from large fines or liability for conduct alleged to violate federal or state laws.

VerizonÕs record underscores the need for a stronger policy. For example, in 2020 the Federal Communications Commission proposed a $48.3 million fine against Verizon for selling customer location data without consent. In 2015 Verizon paid $90 million to settle a FCC investigation alleging Òcramming,Ó which is the unauthorized placement of third-party charges on subscribersÕ mobile phone bills.
Did VerizonÕs board scrutinize the knowledge and actions of the executives responsible to determine if a clawback was justified? And as a general policy matter, shouldnÕt negligence or supervisory failure that harms the Company warrant a clawback?
Incentives influence behavior. We believe stronger incentives not to take undue risks that may boost short-term profitability are appropriate.

Filed by Thomas M. Steed

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