Company Name: Verizon Communications Inc.
Public Availability Date: January 16, 2004Document Sections:
INQUIRY LETTER
APPENDIX 1
APPENDIX 2
APPENDIX 3
STAFF REPLY LETTER [INQUIRY LETTER]
December 18, 2003 Office of Chief Counsel
Division of Corporation Finance
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, D.C. 20549 Re: Verizon Communications Inc. - Omission of Shareholder Proposal Pursuant to
Rule 14a-8 Dear Sir or Madam: We are writing on behalf of our client, Verizon Communications Inc., a Delaware
corporation (the "Company"), pursuant to Rule 14a-8(j) under the Securities
Exchange Act of 1934, as amended, to respectfully request that the Staff of the
Division of Corporation Finance (the "Staff") of the Securities and Exchange
Commission (the "Commission") concur with the Company's view that, for the
reasons stated below, the shareholder proposal and supporting statement (the
"Proposal") submitted by Richard A. Dee (the "Proponent"), may properly be
omitted from the proxy materials (the "Proxy Materials") to be distributed by
the Company in connection with its 2004 annual meeting of shareholders.
Pursuant to Rule 14a-8(j)(2), we are enclosing six copies of (i) this letter and
(ii) the Proposal submitted by the Proponent, attached hereto as Exhibit A. In
accordance with Rule 14a-8(j), a copy of this submission is being sent
simultaneously to the Proponent. I. Introduction
The Proposal requests that the Corporate Governance Committee of the Company's
board of directors (the "Board") nominate two candidates for each directorship
to be filled by a vote of shareholders at the Company's annual meetings.
Specifically, the Proposal states: "It is hereby requested that the Board of Directors adopt promptly a resolution
requiring that the Corporate Governance Committee nominate two candidates for
each directorship to be filled by voting of stockholders at annual meetings. In
addition to customary personal background information, Proxy Statements shall
include a statement by each candidate as to why he or she believes they should
be elected." The Company requests that the Staff concur with its view that the Proposal may
properly be omitted from its Proxy Materials pursuant to the provisions of Rule
14a-8(i)(12)(iii) because the Proposal deals with substantially the same subject
matter as prior proposals that have been included in the Company's proxy
materials three times within the preceding five calendar years and the Proposal
received less than 10% of the vote in its most recent submission to shareholders
at the Company's 2003 annual meeting of shareholders (the "2003 Annual
Meeting"). II. The Proposal May be Excluded Under Rule 14a-8(i)(12)(iii) Because it Deals
with Substantially the Same Subject Matter as Prior Proposals and Received Less
than 10% of the Vote in its Last Submission to Shareholders
Pursuant to Rule 14a-8(i)(12)(iii), the Proposal may be excluded from the
Company's Proxy Materials. Rule 14a-8(i)(12)(iii) states: "(12) Resubmissions: If the proposal deals with substantially the same subject
matter as another proposal or proposals that has or have been previously
included in the company's proxy material within the preceding 5 calendar years,
a company may exclude it from its proxy materials for any meeting held within 3
calendar years of the last time it was included if the proposal received:
* * * (iii) Less than 10% of the vote on its last submission to shareholders if
proposed three times or more previously within the preceding 5 calendar years."
The Proposal is identical to shareholder proposals submitted and voted upon at
the Company's annual meetings held in 2003 and 2002. It is substantially the
same as a proposal submitted and voted upon at the Company's annual meeting held
in 2001 (the "2001 Proposal"). The 2001 Proposal urged the Board "to take the
necessary steps to nominate at least two candidates for each open board
position, and that the names, biographical sketches, SEC required declarations
and photographs of such candidates shall appear in the company's proxy
materials." The 2001 Proposal is substantively the same as the Proposal (that
is, two candidates for each board seat), and varies only from the Proposal in
that it contemplates the inclusion of slightly different information in the
Company's proxy materials. Copies of the shareholder proposals referred to above
which were voted upon at the Company's 2003, 2002 and 2001 annual meetings of
shareholders are attached hereto as Exhibits B, C and D, respectively.
The Commission has stated that judgments under Rule 14a-8(i)(12) are to be
"based upon a consideration of the substantive concerns raised by a proposal
rather than the specific language or actions proposed to deal with those
concerns." Exchange Act Release No. 34-20091 (August 16, 1983). The substantive
concerns in the Proposal and the 2001 Proposal clearly are the same. The Staff
consistently has concluded that companies may properly exclude resubmissions on
the basis of similar substantive concerns, notwithstanding differences in
specific language or implementing activities. See AT&T Corporation (February 17,
1998); Cooper Industries (January 14, 1997); Bristol-Myers Squibb Company
(February 6, 1996); United Technologies Corporation (January 11, 1995); American
Brands, Inc. (February 10, 1994); The Gillette Company (February 25, 1993); and
The Interpublic Group of Companies (April 3, 1992). If, as is the case here, a shareholder proposal has been submitted for a
shareholder vote three times within the preceding five calendar years, the
proposal may properly be omitted if it received less than 10% of the vote the
last time it was submitted. The last time the Proposal was submitted and voted upon, at the 2003 Annual
Meeting, there were 179,678,239 votes cast "for" the Proposal and 1,631,116,471
votes cast "against" the Proposal. As described in Section F.4 of the Division
of Corporation Finance: Staff Legal Bulletin No. 14 (July 13, 2001), only votes
cast "for" and "against" a proposal are included in the calculation of the
shareholder vote on that proposal. Based on that formulation, the number of
shares voting "for" the Proposal at the 2003 Annual Meeting constituted 9.92% of
the total number of shares voting on the Proposal, as shown in the following
calculation: |[NCCDEF] |[UCA1] |[TDC4,M'179.678.239 ::::
1.631.116.471',QC,VU,IP1] |[TCC4,M'::::',QC,VU] |[TCC4,M'1.810.794.710',QC,VU]
|[TCC4,M'::::',QC,VU] |[TCC4,M'9.92::::',QC,VU] |[XT]
|[ST]|[LC15]|[RS4]179,678,239 |[TA] |[TA]179,678,239 |[TA] |[TA]
|[ST]|[TU204]|math|4 |[TA]|[TU204]|math|4 |[TA]9.92% |[ST]179,678,239 |math|
01,631,116,471 |[TA] |[TA]1,810,794,710 |[ET] Accordingly, the percentage vote in favor of the Proposal submitted for a
shareholder vote at the 2003 Annual Meeting was less than 10%.
III. Conclusion The Proposal is substantially similar to shareholder proposals voted upon three
times in the preceding five calendar years, and such proposal received less than
10% of the total votes cast at the 2003 Annual Meeting when it was most recently
submitted and voted upon. Accordingly, the Company requests that the Staff
concur with the Company's view that the Proposal may properly be omitted from
the Proxy Materials pursuant to Rule 14a-8(i)(12)(iii). Should the Staff
disagree with the Company's position or require any additional information, we
would appreciate the opportunity to confer with the Staff concerning these
matters prior to the issuance of its response. If the Staff has any questions or comments regarding the foregoing, please
contact the undersigned at (212) 735-3360, or, in my absence, Richard J.
Grossman of this firm, at (212) 735-2116. Very truly yours,
/s/ Daniel E. Stoller
Enclosures cc: Marianne Drost, Esq., Senior Vice President, Deputy General Counsel and
Corporate Secretary, Verizon Communications Inc. Mr. Richard A. Dee [APPENDIX 1]
Exhibit A Richard A. Dee, 115 East 89th Street, New York, New York, 10128, owner of 200
shares of the Company's common stock, proposes the following:
"Stockholders of publicly-owned corporations do not `elect' directors. Directors
are `selected' by incumbent directors and managements - stockholders merely
`ratify' or approve director selections much as they ratify selections of
auditors. "The term `Election of Directors' is misused in corporate proxy materials to
refer to the process by which directors are empowered. The term is inappropriate
- and it is misleading. With no choice of candidates, there is no election.
"Incumbent directors are anxious to protect their absolute power over corporate
activities. The root of that power is control of Corporate Governance - which is
assured by control of board composition. Unfortunately, the `Elective process
rights' of stockholders are being ignored. "Approval of this Corporate Governance proposal will provide Verizon
Communications stockholders with a choice of director candidates - an
opportunity to vote for those whose qualifications and views they favor.
Approval will provide stockholders with `duly elected' representatives.
"In a democracy, those who govern are duly elected by those whom they represent
- and they are accountable to those who elect them. Continuing in public office
requires satisfying constituents, not only nominators. Corporate directors, who
often divide their time between many companies, take office unopposed - and
answer only to fellow directors. "It is hereby requested that the Board of Directors adopt promptly a resolution
requiring that the Corporate Governance Committee nominate two candidates for
each directorship to be filled by voting of stockholders at annual meetings. In
addition to customary personal background information, Proxy Statements shall
include a statement by each candidate as to why he or she believes they should
be elected. "As long as incumbents are permitted to select and propose only the number of
so-called "candidates" as there are directorships to be filled - and as long as
it is impossible, realistically, for stockholders to utilize successfully what
is supposed to be their right to nominate and elect directors - no practical
means will exist for stockholders to bring about director turnover - until this
or a similar proposal is adopted. Turnover reduces the possibility of inbreeding
and provides sources of new ideas, viewpoints, and approaches.
"The `pool' from which corporate directors are selected must be expanded from
the current preponderance of chairmen and CEO's to include younger executives,
including many more women, whose particular backgrounds qualify them well to
oversee the company's business and to represent shareholder interests properly.
"Although Delaware law provides for director nominees to be selected by
incumbents, approval of this proposal will enable Verizon Communications
stockholders to replace any or all directors if they become dissatisfied with
them - or with the results of corporate policies and/or performance. Not a happy
prospect even for those able to nominate their successors!
"The benefits that will accrue to Verizon Communications stockholders by having
Directors that have been democratically-elected, and who are willing to have
their respective qualifications reviewed and considered carefully by
stockholders, far outweigh arguments raised by those accustomed to being
"selected" - and who are determined to maintain their absolute power over the
Corporate Governance process. "Please vote FOR this proposal."
BOARD OF DIRECTORS' POSITION: The Company fully complies with Delaware law, and the Company's shareholders
have all appropriate voting rights as prescribed by Delaware law, including the
power to elect Directors. Nothing in law requires, however, that an election
provide a choice of candidates, or that shareholders have a "right" to nominate
candidates; the Company's proxy materials are not misleading. The Board of
Directors provides the shareholders with a slate of Director candidates which
the Board believes, in its best judgment, includes the most qualified
individuals who are ready, willing and able to oversee the management of the
affairs of the Company. The law does not require, and the Board does not
believe, that its role is to create a political environment in which nominees
compete with each other for the available directorships. In the Board's
judgment, this Proposal would foster an environment where many well-qualified
persons would not be willing to participate in the type of contested election
that the Proposal would produce. The Board views the present nominating process as the most effective means of
ensuring that appropriately qualified candidates are identified. The Corporate
Govemance Committee of the Board is responsible for identifying annually the
best candidates for election to the Board. The Committee only recommends
nominees who have the experience and skills that best serve the Company and its
shareholders. If the Board were to recommend two "rival" candidates for each
position, it would be difficult to predict which individuals would be elected.
Accordingly, it would be more difficult to ensure that the appropriate skills,
experience and diversity were represented on the Board. There are, in fact,
appropriate procedures in place for shareholders who wish to suggest qualified
candidates, as set forth on page ___ of this Proxy Statement.
The Board of Directors believes that the Company should continue to follow the
present nominating process, which complies with law and is used by virtually all
public companies. The procedure advocated in the Proposal would not be an
efficient or effective means of selecting the best Directors for the Company.
Accordingly, approval of the Proposal is not in the best interest of the Company
and its shareholders. [APPENDIX 2]
RICHARD A. DEE 115 EAST 89TH STREET NEW YORK, NEW YORK 10128
(212) 831-3191 FAX (212) 831-0102
FACSIMILE COVER LETTER Please deliver the following pages to:
Office of Chief Counsel
Division of Corporation Finance
The Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, DC 20549 Total number of pages, including this cover letter: 4
Date: 12/19/03 Time: 8:30 PM
To Fax #: (202) 942-9525 If you do not receive the number of pages indicated, or if any communication
problem is experienced, please telephone (212) 831-3191. RE: VERIZON COMMUNICATIONS INC.
Please acknowledge receipt. [APPENDIX 3]
December 19, 2003 By Fax to (202) 942-9525
Office of Chief Counsel
Division of Corporation Finance
The Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, DC 20549 Re: Verizon Communications Inc. - 2004 Stockholder Proposal
Ladies and Gentlemen: On behalf of its client, Verizon Communications Inc., Skadden, Arp, Slate,
Meagher & Flom has written to you to request that you agree to omission of the
2004 proposal that I submitted to Verizon calling upon it to provide
stockholders with a choice of director candidates. I originated this Corporate Governance proposal, and I sponsored it first in
1995 when it was voted on by stockholders of Verizon's predecessors, Nynex and
Bell Atlantic - and by the stockholders of three other major companies. I have
sponsored the proposal on a number of occasions since 1995, and it was voted on
by Verizon stockholders most recently in 2003. Verizon informed me by letter, a copy of which is enclosed, that at its 2003
Annual Meeting 10% of its shares had been voted For my proposal, and 90% Against
it. I took Verizon at its word. My 2004 proposal, which is almost identical to that voted on in 2003, actually
was submitted to and received by Verizon on January 2, 2001. And, I shall
petition for its inclusion in 2004 proxy materials. Following its April 2003 annual meeting, Verizon, with my 2004 proposal in hand,
had eight months time during which to challenge it on the basis that it may have
received a hair less than the 10% of the vote that it confirmed to me. It did
not do so. Instead of informing me of the slight inconsistency in its reporting, Verizon
acknowledged receipt of my 2004 proposal, asked for proof of my holdings (which
I furnished), and then waited until about a month after the submission date for
2004 proposals had passed before issuing its challenge - via outside counsel.
Planning to complicate if not preclude inclusion of any proposal sponsored by
me? Possibly. I am optimistic that Verizon will consider carefully the circumstances involved
here - and that we can come to a fair and reasonable understanding that will not
require the Commission's involvement. I think this problem can be settled
simply, easily, and amicably by me and Verizon, and I shall proceed on that
basis at once. Hopefully, we will be able to come up with a mutually
satisfactory solution. Sincerely, /s/
Enclosures (2)
[STAFF REPLY LETTER]
December 23, 2003 Office of Chief Counsel
Division of Corporation Finance
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, D.C. 20549 Re: Verizon Communications Inc. - Omission of Shareholder Proposal Pursuant to
Rule 14a-8 Dear Sir or Madam: I refer to my letter dated December 18, 2003 (the "December 18 Letter") pursuant
to which Verizon Communications Inc. (the "Company") requested that the Staff of
the Division of Corporation Finance (the "Staff") of the Securities and Exchange
Commission (the "Commission") concur with the Company's view that the
shareholder proposal and supporting statement (the "Proposal") submitted by
Richard A. Dee (the "Proponent") may properly be omitted pursuant to Rule
14a-8(i)(12)(iii) from the proxy materials (the "Proxy Materials") to be
distributed by the Company in connection with its 2004 annual meeting of
shareholders. This letter is in response to the letter from the Proponent to the
undersigned dated December 19, 2003 (the "Proponent's Letter"). Although the
Proponent's Letter indicates that it was furnished to the Staff, we are
attaching a copy of the Proponent's Letter as Exhibit A hereto. In accordance
with Rule 14a-8(j), a copy of this letter is being sent simultaneously to the
Proponent. The Proponent raises two issues in the Proponent's Letter. First, while
acknowledging that his identical proposal (the "2003 Proposal") submitted for a
vote at the Company's 2003 annual meeting of shareholders (the "2003 Annual
Meeting") did not receive 10% of the vote (which the Proponent refers to in the
last paragraph of the Proponent's Letter as a "slight apparent shortfall"), the
Proponent cites a letter dated May 21, 2003 (the "May 2003 Letter") from the
Company's Assistant General Counsel relating to the vote on the 2003 Proposal at
the 2003 Annual Meeting. The May 2003 Letter correctly provides the voting
results on the 2003 Proposal, which results are identical to those cited in
Section II of the December 18 Letter. The Proponent's sole argument is that the May 2003 Letter, in rounding the
percentage votes to the nearest whole number, indicated that the vote on the
2003 Proposal was 10% "For" and 90% "Against." As shown in Section II of the
December 18 Letter, the voting results on the 2003 Proposal, when calculated in
accordance with Section F.4 of the Division of Corporation Finance: Staff Legal
Bulletin No. 14 (July 13, 2001), were 9.92% "For" and 90.08% "Against."
The actual vote totals were furnished to the Proponent in the May 2003 Letter,
and the manner of calculating voting percentages for purposes of Rule
14a-8(i)(12) are publicly known and available to the Proponent. It is the actual
voting results, calculated in accordance with the Staff's instructions, that are
determinative for purposes of Rule 14a-8(i)(12). The second issue raised in the Proponent's Letter is that he would have
preferred that the Company submit to the Staff its no action request letter
prior to December 18, 2003. In submitting such letter on December 18, 2003, the
Company fully complied with the provisions of Rule 14a-8(j)(1), which state
"[i]f the Company intends to exclude a proposal from its proxy materials, it
must file its reasons with the Commission no later than 80 calendar days before
it files its definitive proxy statement and form of proxy with the Commission."
December 18, 2003 is 80 days prior to March 7, 2004, and the Company will not
file its definitive proxy statement and form of proxy with the Commission prior
to March 7, 2004. Accordingly, the December 18 Letter was submitted on a timely
basis in accordance with the Rule 14a-8(j)(1). For the reasons set forth above and in the December 18 Letter, the Company
believes that the Proposal may properly be omitted from the Proxy Materials and
requests the Staff's concurrence with its views. Should the Staff disagree with
the Company's conclusions regarding the exclusion of the Proposal from the Proxy
Materials, or should any additional information be desired in support???
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