Company Name: Verizon Communications Inc.
Public Availability Date: January 21, 2005
Document Sections:
INQUIRY LETTER
APPENDIX
STAFF REPLY LETTER
[INQUIRY LETTER]
December 22, 2004
Office of Chief Counsel
Division of Corporation Finance
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Verizon Communications Inc. 2005 Annual Meeting
Shareholder Proposal of Richard A. Dee
Ladies and Gentlemen:
This letter is submitted on behalf of Verizon Communications Inc., a Delaware
corporation ("Verizon"), pursuant to Rule 14a-8(j) under the Securities Exchange
Act of 1934, as amended. Verizon has received a shareholder proposal and
supporting statement (the "Proposal") from Richard A. Dee (the "Proponent"), for
inclusion in the proxy materials to be distributed by Verizon in connection with
its 2005 annual meeting of shareholders (the "2005 proxy materials"). For the
reasons stated below, Verizon intends to omit the Proposal from its 2005 proxy
materials.
Pursuant to Rule 14a-8(j)(2), enclosed are six copies of (i) this letter and
(ii) the Proposal submitted by the Proponent, attached hereto as Exhibit A. A
copy of this letter is also being sent to the Proponent as notice of Verizon's
intent to omit the Proposal from Verizon's 2005 proxy materials.
I. Introduction
The Proposal requests that the Corporate Governance Committee of Verizon's board
of directors (the "Board") nominate two candidates for each directorship to be
filled by a vote of shareholders at Verizon'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."
Verizon requests that the Staff of the Division of Corporation Finance (the "Staff")of
the Securities and Exchange Commission (the "Commission") concur with its view
that the Proposal may properly be omitted from its 2005 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 Verizon'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 Verizon's 2003 annual meeting of shareholders (the
"2003 Annual Meeting"). It should be noted that the Proponent submitted an
identical proposal in connection with Verizon's 2004 annual meeting of
shareholders, but, with the Staff's concurrence, Verizon excluded such proposal
from its 2004 proxy materials pursuant to Rule 14a-8(1)(12)(iii).
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 Verizon's
2005 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 with 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
Verizon's annual meetings held in 2003 and 2002. It is substantially the same as
a proposal submitted and voted upon at Verizon'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 Verizon'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 Verizon's proxy materials. Copies of the
shareholder proposals referred to above which were voted upon at Verizon'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 the proposal. Based on the 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,IP1]
|[TCC4,M'::::',QC,G.24] |[TCC4,M'1,179,678,239',QC,G.24]
|[TCC4,M':::::0.00:::::',QC,G.24] |[XT] |[ST]|[LC5]|[RS4]179,678,239 |[TA]
|[TA]179,678,239 |[TA] |[ST]|[TU204] |[TA]|[TU204] |[TA] |[ST] |[TA]|MATH|4
|[TA] |[TA]|MATH|4 9.92% |[ST]179,678,239 |MATH|0 1,631,116,471 |[TA]
|[TA]1,810,794,710 |[TA] |[ET]
Accordingly, the percentage vote in favor of the Proposal submitted for a
shareholder vote at the 2003 Annual Meeting was less than 10%.
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, Verizon requests that the Staff concur
with Verizon'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
Verizon'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.
Kindly acknowledge receipt of this letter by stamping and returning the extra
enclosed copy of this letter in the enclosed self-addressed, stamped envelope.
If you have any questions with respect to this matter please telephone me at
(212) 395-6256.
Very truly yours,
/s/
Mary Louise Weber
Assistant General Counsel
Enclosures
cc: Mr. Richard A. Dee
115 East 89th Street
New York, NY 10128
[APPENDIX]
Exhibit A
RICHARD A. DEE
Stockholder Proposal2005 Proxy Statement
VERIZON COMMUNICATIONS INC.
Submitted January 2, 2001
"Stockholders of publicly-owned corporations do not `elect' directors. Directors
are `selected' by incumbent directors and managementsstockholders 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
inappropriateand 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 Governancewhich 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 candidatesan 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
representand 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
unopposedand 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 filledand as long as it
is impossible, realistically, for stockholders to utilize successfully what is
supposed to be their right to nominate and elect directorsno practical means
will exist for stockholders to bring about director turnoveruntil 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
themor 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."
* * * *
[STAFF REPLY LETTER]
January 21, 2005
Response of the Office of Chief Counsel Division of Corporation Finance
Re: Verizon Communications Inc.
Incoming letter dated December 22, 2004
The proposal requests that the board of directors adopt a resolution requiring
the nomination of two candidates for each directorship to be filled by the
voting of stockholders at annual meetings, and, in addition to customary
background information, include a statement from each candidate as to why he or
she should be elected in Verizon's proxy statement.
There appears to be some basis for your view
that Verizon may exclude the proposal under rule 14a-8(i)(12)(iii). In arriving
at this position, we note that a proposal dealing with substantially the same
subject matter received 9.92% of the vote at Verizon's annual meeting held in
2003. Accordingly, we will not recommend enforcement action to the Commission if
Verizon omits the proposal from its proxy materials in reliance on rule
14a-8(i)(12)(iii).
Sincerely,
/s/
Mark F. Vilardo
Special Counsel
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