Company Name: Verizon Communications Inc.
Public Availability Date: February 16, 2006
Document Sections:
INQUIRY LETTER
INQUIRY LETTER
INQUIRY LETTER
STAFF REPLY LETTER
[INQUIRY LETTER]
December 28, 2005
Division of Corporation Finance
Office of the Chief Counsel
450 Fifth Street, N.W.
Washington D.C. 20549
Re: Verizon Communications Inc. 2006 Annual Meeting Shareholder Proposal of
Raymond Nolte
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"), dated November 2, 2005, from Raymond
William Nolte (the "Proponent"), for inclusion in the proxy materials to be
distributed by Verizon in connection with its 2006 annual meeting of
shareholders (the "2006 proxy materials"). A copy of the Proposal is attached as
Exhibit A. For the reasons stated below, Verizon intends to omit the Proposal
from its 2006 proxy materials.
Pursuant to Rule 14a-8(j)(2), enclosed are six copies of this letter and 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 2006 proxy materials.
I. Introduction.
On November 17, 2005, Verizon received a letter from the Proponent containing
the following proposal:
BE IT RESOLVED, that Verizon Communications Corporation cease and desist
mandating their customers to contribute to the Federal and State Universal Fees,
which will result in the strengthening of the American way in out great
republic, the U.S.A.
Verizon believes that the Proposal may be properly omitted from its 2006 proxy
materials pursuant to Rule 14a-8(i)(7), because it deals with a matter relating
to the company's ordinary business operations.
II. The Proposal May Be Omitted Under Rule 14a-8(i)(7) Because it Deals With a
Matter Relating to Verizon's Ordinary Business Operations.
Rule 14a-8(i)(7) permits a company to omit a shareholder proposal from its proxy
materials if it deals with a matter relating to the company's ordinary business
operations. The general policy underlying the "ordinary business" exclusion is
"to confine the resolution of ordinary business problems to management and the
board of directors, since it is impracticable for shareholders to decide how to
solve such problems at an annual shareholders meeting." Exchange Act Release No.
34-40018 (May 21, 1998). This general policy reflects two central
considerations: (i) "[c]ertain tasks are so fundamental to management's ability
to run a company on a day-to-day basis that they could not, as a practical
matter, be subject to direct shareholder oversight"; and (ii) the "degree to
which the proposal seeks to 'micro-manage' the company by probing too deeply
into matters of a complex nature upon which shareholders, as a group, would not
be in a position to make an informed judgment." Exchange Act Release No.
34-40018 (May 21, 1998). Verizon believes that the collection in customer
telephone bills of legal and proper surcharges in accordance with applicable
regulations is a matter that falls squarely within its ordinary, day-to-day
business operations. Moreover, the elimination of these fees and surcharges
would result in lost revenues and, in management's view, could adversely affect
value for all shareholders.
Verizon's recovery of the cost of contributions that it is required to make by
federal and state regulators to the Federal and State Universal Service Funds
clearly involves a business matter that is part of the ordinary, day-to day
operations of a telecommunications carrier. The Staff has previously agreed that
similar proposals relating to ordinary business functions may be excluded under
Rule 14a-8(i)(7). See Dow Jones & Company (January 18, 2001) (proposal relating
to the recoupment of abandoned property); Houston Industries Inc. (March 3,
1999) (proposal relating to treatment of usage or billing complaints from the
company's customers); American Telephone and Telegraph Co. (December 31, 1991)
(proposal relating to method of billing); and Public Service Company of Colorado
(February 1, 1980) (proposal relating to credit and collection policies with
respect to delinquent accounts).
In addition, the Staff consistently has agreed to the exclusion of shareholder
proposals that go beyond addressing a policy issue and instead seek to
micro-manage a particular aspect of a company's activities. For example, the
Staff has permitted a proposal to be excluded under Rule 14a-8(i)(7) where the
proposal appeared to be directed at engaging the company in a political or
legislative process relating to an aspect of its business operations.
International Business Machines Corporation (March 2, 2000) (proposal sought
establishment of a board committee to evaluate the impact of pension-related
proposals under consideration by national policymakers). See also Pacific
Enterprises (February 12, 1996) (proposal that a utility dedicate its resources
to ending state utility deregulation was excludable); Pepsico, Inc. (March 7,
1991) (permitting exclusion of proposal calling for an evaluation of the impact
on the company of various federal healthcare proposals); Dole Food Company
(February 10, 1992) (same); and GTE Corporation (February 10, 1992) (same).
Here, the Proponent clearly wants to commandeer Verizon into supporting his
personal agenda of abolishing what he refers to as the "mandatory charity"
represented by the federally and state mandated Universal Service Funds. In the
introduction to the Proposal, he states: "it seems that the American way would
be for the Verizon attorneys to resist the F.C.C. against these anti-American
charges instead of passing them on to their customers." The Proposal, in order
to advance the Proponent's personal agenda, inappropriately seeks to intervene
in Verizon's day-to- day operations and micromanage the company's basic business
decisions as to legal and proper expense recovery.
III. Conclusion.
Verizon believes that the Proposal may omitted from the 2006 proxy materials
pursuant to Rule 14a-8(i)(7) because the collection of fees and surcharges is
within the scope of Verizon' ordinary business operations. Accordingly, Verizon
respectfully requests the concurrence of the Staff that it will not recommend
enforcement action against Verizon if Verizon omits the Proposal in its entirety
from its 2006 proxy materials.
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
(908) 559-5636.
Very truly yours,
/s/
Mary Louise Weber
Assistant General Counsel
Enclosures
cc: Raymond Nolte
[INQUIRY LETTER]
November 2, 2005
Verizon Communications, Inc.
1095 Avenue of the Americas
New York, NY 10036
Dear Verizon:
As a stockholder, I hereby submit this stockholder proposal for consideration at
the next shareholder meeting.
WHEREAS, our great country, the United States of America is a constitutional
republic and not a socialistic country, and
WHEREAS, the American way is to discourage greed when it is found, and
WHEREAS, Verizon officials have determined that the dollar is more important
than doing the right thing for their American customers by passing along fees to
Verizon customers (the Federal and State Universal Service Fees), which are
initially charged to Verizon from the Federal Communication Commission and
amount to a mandatory charity, and
WHEREAS, both the Federal and State Universal Fees allegedly provide phone
service for poor people and also allegedly provide computers, etc., to our
schools, and
WHEREAS, each American is free to choose their own charities they wish to
support, and most Americans pay school taxes that provide computers, etc., to
our schools, and
WHEREAS, there is apparently no audit of these funds extracted from Verizon
customers, and
WHEREAS, Verizon keeps a portion of these funds extracted from their customers,
rather than resist the anti-American F.C.C. charges, and
WHEREAS, Verizon probably has attorneys on retainer or on staff to do their
legal work, and
WHEREAS, it seems that the American way would be for the Verizon attorneys to
resist the F.C.C. against these anti-American charges instead of passing them on
to their customers, and
WHEREAS, by Verizon's own definition of "cramming", the customers do not
authorize these charges to be added to their phone bill, and
WHEREAS, if the customer refuses to pay these anti-American charges, Verizon
threatens their customer with disconnection of phone service, which amounts to
extortion, and
WHEREAS, this act of extortion resulting in disconnection of service has
occurred in at least one instance with a Verizon customer,
BE IT RESOLVED, that Verizon Communications Corporation cease and desist
mandating their customers to contribute to the Federal and State Universal
Service Fees, which will result in the strengthening of the American way in our
great republic, the U.S.A.
Sincerely,
/s/
Raymond W. Nolte
[INQUIRY LETTER]
January 3, 2006
Office of the Chief Counsel
Division of Corporation Finance
Securities and Exchange Commision
450 Fifth Street, N.W.
Washington DC 20549
Re: Verizon Communications Inc.
2006 Annual Share Holder Meeting
Share Holder Proposal of Raymond W. Nolte
Ladies and Gentlemen:
I received a copy of a letter to you from Verizon, (copy enclosed).
Verizon intends to omit my proposal for the 2006 shareholder annual meeting on
blatant and specious reasoning.
My proposal is not "ordinary business" of Verizon and is certainly not "micro
managing Verizon" in any way.
I want to believe that you ladies and Gentlemen love our great United States of
America, and the fair and just American way, to do the responsible thing and
deny Verizons request to subvert the shareholders rights to submit reasonable
proposals to a corporation.
Thank you very much for your fair and just consideration.
Please notify me of your decision by mail.
Also, I am a present and current shareholder of Verizon communications Inc.
/s/
Raymond W. Nolte
420 Charles Street
Keller, Tx. 76248-3332
[STAFF REPLY LETTER]
February 16, 2006
Response of the Office of Chief Counsel Division of Corporation Finance
Re: Verizon Communications Inc. Incoming letter dated December 28, 2005
The proposal would require the company to "cease and desist mandating their
customers to contribute to the Federal and State Universal Service Fees."
There appears to be some basis for your view that Verizon may exclude the
proposal under rule 14a-8(i)(7), as relating to Verizon's ordinary business
operations (i.e., decisions concerning the recovery of fees). 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)(7).
Sincerely,
/s/
Timothy Geishecker
Attorney-Adviser
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