Company Name: Verizon Communications Inc.
Public Availability Date: January 8, 2008
Document Sections:
INQUIRY LETTER
INQUIRY LETTER
STAFF REPLY LETTER
STAFF REPLY LETTER
[INQUIRY LETTER]
December 19, 2007
U.S. Securities and Exchange Commission
Division of Corporation Finance
Office of Chief Counsel
100 F Street, N.E.
Washington, D.C. 20549
Re: Verizon Communications Inc. 2008 Annual Meeting Shareholder Proposal of the
International Brotherhood of Electrical Workers' Pension Benefit Fund
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 the International Brotherhood of
Electrical Workers' Pension Benefit Fund (the "Proponent"), for inclusion in the
proxy materials to be distributed by Verizon in connection with its 2008 annual
meeting of shareholders (the "2008 proxy materials"). A copy of the Proposal is
attached as Exhibit A to this letter. For the reasons stated below, Verizon
intends to omit the Proposal from its 2008 proxy materials.
Pursuant to Rule 14a-8(j)(2), enclosed are six copies of this letter and the
accompanying attachments. 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 2008
proxy materials.
I. Introduction.
On November 16, 2006, Verizon received a letter from the Proponent containing
the following proposal:
"RESOLVED: That the shareholders of Verizon Communications Inc. ("Company"),
assembled in Annual Meeting in person and by proxy, hereby request the Board of
Directors to take the necessary steps to provide for cumulative voting in the
election of directors, which means each stockholder shall be entitled to as many
votes as shall equal the number of shares he or she owns multiplied by the
number of directors to be elected, and he or she may cast all of such votes for
a single candidate, or any two or more of them as he or she may see fit."
Verizon believes that the Proposal may be properly omitted from its 2008 proxy
materials because the Proponent failed to provide documentary support that the
Proponent meets the eligibility requirements of Rule 14a-8. Verizon respectfully
requests the concurrence of the Staff of the Division of Corporation Finance
(the "Staff") of the Securities and Exchange Commission (the "Commission") that
it will not recommend enforcement action against Verizon if Verizon omits the
Proposal in its entirety from its 2008 proxy materials.
II. The Proposal May be Excluded from the 2008 Proxy Materials Pursuant to Rule
14a-8(f) Because the Proponent Failed to Meet the Eligibility Requirements of
Rule 14a-8(b)(1).
Rule 14a-8(b)(1) provides that, in order to be eligible to submit a proposal, a
shareholder must have continuously held at least $ 2,000 in market value, or 1%,
of the company's securities entitled to be voted on the proposal for at least
one year prior to the date the proposal is submitted and must continue to hold
those securities through the date of the meeting. If the proponent is not a
registered holder, he or she must provide proof of beneficial ownership of the
securities. Under Rule 14a-8(f)(1), a company may exclude a shareholder proposal
if the proponent fails to provide evidence that it meets the eligibility
requirements of Rule 14a-8(b), provided that the company timely notifies the
proponent of the deficiency and the proponent fails to correct the deficiency
within the required time.
Verizon received the Proposal via facsimile transmission on November 16, 2007.
After determining that the Proponent was not a shareholder of record, in
accordance with Rule 14a-8(f)(1) on November 20, 2007 Verizon sent a letter to
the Proponent via Federal Express (the "Notification Letter") requesting a
written statement from the record owner of the Proponent's shares verifying that
the Proponent beneficially owned the requisite number of shares of Verizon stock
continuously for at least one year prior to the date of submission of the
Proposal. The Notification Letter also advised the Proponent that such written
statement had to be submitted to Verizon within 14 days of the Proponent's
receipt of such letter. Verizon received confirmation from Federal Express that
the Notification Letter was delivered to and accepted by the Proponent on
November 21, 2007. A copy of the Notification Letter is attached as Exhibit B to
this letter.
On November 21, 2007, Verizon received by facsimile transmission a letter (the
"Response Letter") from Mellon Trust of New England ("Mellon"), stating that it
is the custodian for the Proponent and that the Proponent "has held at least
$2,000 worth of Verizon Communications Inc. common stock for the past year." A
copy of the Response Letter is attached as Exhibit C to this letter.
The Response Letter fails to satisfy the requirements of Rule 14a-8(b). Pursuant
to such Rule, the Proponent was required to submit a written statement from
Mellon verifying the Proponent's continuous ownership of Verizon's shares from
November 16, 2006 through November 16, 2007, the date the Proponent submitted
the Proposal. In the Response Letter, Mellon does not make any such statement.
Instead, as noted above, Mellon states that the Proponent "has held at least
$2,000 worth of Verizon Communications Inc. common stock for the past year." The
Response Letter was dated November 20, 2007; accordingly, Mellon verified that
the Proponent had held the requisite shares from November 20, 2006 through
November 20, 2007. The Proponent failed to provide evidence that it held the
requisite shares during the period from November 16, 2006 through November 20,
2006.
In Division of Corporation Finance: Staff Legal Bulletin No. 14 (July 13, 2001),
in Section C.l.c.(2), it is stated that "[a] shareholder must submit an
affirmative written statement from the record holder of his or her securities
that specifically verifies that the shareholder owned the securities
continuously for a period of one year as of the time of submitting the
proposal." This requirement is evidenced by the example cited in Section C.l.c.(3)
of Staff Legal Bulletin No. 14:
If a shareholder submits his or her proposal to the company on June 1, does a
statement from the record holder verifying that the shareholder owned the
securities continuously for one year as of May 30 of the same year demonstrate
sufficiently continuous ownership of the securities as of the time he or she
submitted the proposal?
No. A shareholder must submit proof from the record holder that the shareholder
continuously owned the securities for a period of one year as of the time the
shareholder submits the proposal.
In the example from Staff Legal Bulletin No. 14 cited above, there was no proof
of ownership between May 30 and June 1. In the case of the Proposal, there is no
proof of ownership between November 16, 2006 and November 20, 2006.
The Staff has consistently taken the position that if a proponent does not
provide documentary support sufficiently evidencing that it has satisfied the
minimum ownership requirement for the one-year period specified by Rule
14a-8(b), the proposal may be excluded under Rule 14a-8(f). In two circumstances
identical to the present case, The Home Depot, Inc. (February 5, 2007) and Toll
Brothers, Inc. (January 10, 2006), the Staff allowed the company to exclude a
shareholder proposal because Mellon failed to verify the proponent's continuous
ownership for one year prior to the date on which the proposal was submitted. In
both instances, Mellon verified ownership "for the past year," just as it has
done with respect to the Proponent's ownership of Verizon shares. In Home Depot,
Mellon verified ownership for one year preceding November 7, 2006, the date of
Mellon's letter, when the proposal was submitted on October 19, 2006. As a
result, there was no verification of ownership during the period from October
19, 2005 to November 7, 2005. Similarly, in Toll Brothers, Mellon verified
ownership for one year preceding November 8, 2005, the date of Mellon's letter,
when the proposal was submitted on October 21, 2005. As a result, there was no
verification of ownership during the period from October 21, 2004 to November 8,
2004. See also, Nabors Industries Ltd. (March 8, 2005) (the letter from a bank
stating ownership for more than one year "prior to January 12, 2005" was
insufficient to provide proof of ownership for the year preceding January 7,
2005, the date of proposal submission) and Eastman Kodak Company (February 7,
2001) (broker letter stating ownership from November 1, 1999 through November 1,
2000 was insufficient to provide proof of ownership for the year preceding
November 21, 2000, the date of proposal submission).
While Rule 14a-8(f) requires a company receiving a proposal to notify the
proponent of any procedural or eligibility deficiencies, it does not require a
second notification if the response to the first notification was deficient. Any
further verification the Proponent might now submit would be untimely under the
Commission's rules. Therefore, Verizon believes that the Proposal is excludable
pursuant to Rule 14a-8(f) because the Proponent failed to remedy the eligibility
deficiency after notification by Verizon.
III. Conclusion.
For the foregoing reasons, Verizon believes that the Proposal may be omitted
from its 2008 proxy materials under Rule 14a-8(f). 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 the 2008 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: International Brotherhood of Electrical Workers' Pension Benefit Fund
900 Seventh Street, NW
Washington, DC 20001
[INQUIRY LETTER]
January 7, 2008
U.S. Securities and Exchange Commission
Division of Corporation Finance
Office of the Chief Counsel
100 F Street, N.E.
Washington, D.C. 20549
RE: Verizon Communications Inc. 2008 Annual Meeting Shareholder Proposal of the
International Brotherhood of Electrical Workers' Pension Benefit Fund
Dear Ladies and Gentlemen:
This letter is submitted on behalf of the International Brotherhood of
Electrical Workers' Pension Benefit Fund ("the Fund") in response to the
December 19, 2007 letter ("no action letter") from Verizon Communications Inc.
("Verizon") which seeks to exclude the Fund's shareholder proposal from
Verizon's proxy materials for its 2008 annual meeting of shareholders on the
grounds that a letter dated November 20, 2007 from the Fund's custodian
("Custodian letter") (Exhibit C to Verizon's no-action letter) failed to verify
that the Fund held at least $2,000 worth of Verizon stock during the period from
November 16-20, 2006.
Six copies of this letter and the accompanying attachment are enclosed and a
copy is also being sent to Verizon.
The Fund respectfully submits that Verizon should not be able to exclude the
Fund's shareholder proposal from Verizon's proxy materials for its 2008 annual
meeting of shareholders because:
The Custodian letter should be construed as verifying that the Fund held at
least $2,000 worth of Verizon stock during the period from November 16-20, 2006.
If Verizon was confused by the wording of the Custodian letter, Rule 14a-8(f)
under the Securities and Exchange Act of 1934 requires Verizon to notify the
Fund of any alleged eligibility or procedural problems which Verizon failed to
do.
The Fund's custodian submitted a January 3, 2007 letter to Verizon, with six
copies to the Securities and Exchange Commission, clarifying that the Fund did
indeed own at least $2,000 worth of stock during the period from November 16-20,
2006. A copy of this letter is attached hereto as Exhibit A.
The Custodian letter should be construed as verifying that the Fund held at
least $2,000 worth of Verizon stock during the period from November 16-20, 2006.
On November 16, 2007, the Fund faxed a shareholder proposal to Verizon (Exhibit
A to Verizon's December 19, 2007 letter).
Verizon sent a letter to the Fund, dated November 20, 2007 and delivered at
10:45 a.m. on November 21, 2007 (Exhibit B to Verizon's no action letter),
requesting a written statement from the Fund's record holder "verifying that the
proponent has beneficially held the requisite number of shares of Verizon common
stock continuously for at least one year prior to the date of the submission".
(Emphasis supplied.)
At 3:13 p.m. on November 21, 2007, the Custodian letter (Exhibit C to Verizon's
no action letter) was faxed to Verizon. It stated in pertinent part that the
Fund:
"held 173,150 shares of Verizon Communications Inc. common stock on November 16,
2007. The Fund has held at least $2,000 worth of Verizon Communications Inc.
common stock for the past year." (Emphasis supplied.)
Verizon's no action letter (page 3) argues that merely because the Custodian
letter is dated November 20, 2007, the foregoing reference to "the past year"
must be construed as verifying ownership of the requisite number of shares from
November 20, 2006 through November 20, 2007. There is nothing else but the date
of the Custodian letter to support this construction.
The Fund respectfully submits that Verizon's construction is invalid and that
the Custodian letter should be construed as verifying ownership for the one year
prior to the date of submission (i.e., November 16, 2006-November 16, 2007)
because:
1. Verification of the one-year period prior to the date of submission is what
the Verizon November 20, 2007 letter requested. The Custodian letter was sent in
response to the Verizon letter. Common sense dictates that the Custodian letter
was supplying the requested verification. Why would the Custodian letter be for
a time period different than what was requested by the Verizon letter?
2. Plain English and logic construe the Custodian letter as verifying ownership
for the November 16, 2006 to November 16, 2007 period. The first sentence of the
Custodian letter verifies ownership as of November 16, 2007, the date of
submission. The next sentence's verification of ownership "for the past year"
can only refer to the year prior to the date of submission. Nothing in the body
of the Custodian letter suggests otherwise.
If Verizon was confused by the wording of the Custodian letter, Rule 14a-8(f)
under the Securities and Exchange Act of 1934 requires Verizon to notify the
Fund of any alleged eligibility or procedural problems, which Verizon failed to
do.
Rule 14a-8(f) requires Verizon to notify the Fund of any procedural or
eligibility problems in its proposal. Verizon's no action letter (page 4) argues
that its November 20, 2007 letter notified the Fund that its verification of
ownership was deficient and that it has no duty to notify the Fund of any other
deficiency.
In fact, Verizon's November 20, 2007 could not notify the Fund of any
eligibility or procedural problems because, as of the time Verizon's November
20, 2007 letter was sent, there was no eligibility or procedural problems.
When the Fund submitted its shareholder proposal on November 16, 2007, the
Fund's cover letter (Exhibit A to the no action letter) stated: "The record
holder of the stock will provide the appropriate verification of the Fund's
beneficial ownership by separate letter." Thus the Fund was well aware of the
need for such a letter and had arranged for it to be sent. This is hardly a
"problem."
Verizon's November 20, 2007 letter (Exhibit B to the no action letter) does not
purport to notify the Fund any eligibility or procedural problems. Verizon's
November 20, 2007 letter simply asks the Fund for written statement from the
record holder of its securities verifying that the proponent has beneficially
held the requisite number of shares of Verizon common stock for at least one
year prior to the date of submission which the Fund's November 16, 2007 letter
has already advised Verizon will be forthcoming.
It was not until Verizon was faxed the Custodian letter at 3:13 p.m. on November
21, 2007 that the alleged deficiency arose, due to Verizon's construction of the
Custodian letter. Now that there was a problem, Verizon's had a duty to notify
the Fund of the problem, but it failed to do so.
Verizon's no action letter (page 4) also argues that there is no continuing duty
under Rule 14a-8(f) for it to give a second notification if the response to the
first notification was deficient. Verizon cites no authority for this
conclusion.
Verizon's argument is contrary to the letter and spirit of Rule 14a-8(f), the
Question and Answer format of which stresses the need for a company to give
notice of a problem so that a shareholder has the opportunity to correct it:
"(f) Question 6. What if I fail to follow one of the eligibility or procedural
requirements explained in answers to Questions 1 through 4 of this section?
(1) The company may exclude your proposal, but only after it has notified you of
the problem and you have failed adequately to correct it." (Emphasis supplied.)
The "problem" that Verizon is citing as grounds for excluding the Fund's
shareholder proposal is the alleged failure of the Custodian letter to verify
the Fund's ownership of Verizon shares from November 16, 2006 to November 20,
2006. Verizon never notified the Fund of this problem until Verizon filed its no
action letter. Verizon's failure to give notice of the problem deprived the Fund
of the opportunity to correct it, which the Fund's custodian could have easily
done (see the Custodian's January 3, 2008 letter that is attached hereto as
Exhibit A).
The Fund respectfully submits that it would be unjust to now reward Verizon for
failing to notify the Fund of the alleged deficiency by allowing Verizon to
exclude the Fund's proposal from Verizon's proxy materials for its 2008 annual
meeting.
The Fund's custodian submitted a January 3, 2007 letter to Verizon clarifying
that the Fund did indeed own at least $2,000 worth of stock during the period
from November 16-20, 2006.
The injustice of rewarding Verizon for its failure to notify the Fund of the
alleged deficiency is underscored by the January 3, 2007 letter the Fund's
Custodian sent to Verizon clarifying the Fund's ownership. A copy of the letter
is attached hereto as Exhibit A. This letter verifies that the Fund is indeed
eligible to file the proposal.
For the foregoing reasons, the Fund believes that the relief sought in Verizon's
no action letter should not be granted.
If you have any questions, please feel free to contact the undersigned at
312-612-8452 or at kinczewski@marcoconsulting.com.
Very Truly Yours,
/s/
Greg A. Kinczewski
Vice President/General Counsel
GAK: mal
Enclosure
cc: Mary Louise Weber
Assistant General Counsel
Verizon Communications
One Verizon Way, RM VC54S440
Basking Ridge, NJ 07920
[STAFF REPLY LETTER]
January 8, 2008
Response of the Office of Chief Counsel Division of Corporation Finance
Re: Verizon Communications Inc. Incoming letter dated December 19, 2007
The proposal relates to cumulative voting.
There appears to be some basis for your view that Verizon may exclude the
proposal under rule 14a-8(f). We note that the proponent appears to have failed
to supply, within 14 days of receipt of Verizon's request, documentary support
indicating that it has satisfied the minimum ownership requirement for the
one-year period as required by rule 14a-8(b). Accordingly, we will not recommend
enforcement action to the Commission if Verizon omits the proposal from its
proxy materials in reliance on rules 14a-8(b) and 14a-8(f).
Sincerely,
/s/
Heather L. Maples
Special Counsel
[STAFF REPLY LETTER]
January 8, 2008
Mary Louise Weber
Assistant General Counsel
Verizon Communications Inc.
One Verizon Way, Rm VC54S440
Basking Ridge, NJ 07920
Re: Verizon Communications Inc. Incoming letter dated December 19, 2007
Dear Ms. Weber:
This is in response to your letter dated December 19, 2007 concerning the
shareholder proposal submitted to Verizon by the Trust for the International
Brotherhood of Electrical Workers' Pension Benefit Fund. We also have received a
letter on the proponent's behalf dated January 7, 2008. Our response is attached
to the enclosed photocopy of your correspondence. By doing this, we avoid having
to recite or summarize the facts set forth in the correspondence. Copies of all
of the correspondence also will be provided to the proponent.
In connection with this matter, your attention is directed to the enclosure,
which sets forth a brief discussion of the Division's informal procedures
regarding shareholder proposals.
Sincerely,
/s/
Jonathan A. Ingram
Deputy Chief Counsel
Enclosures
cc: Jon F. Walters Trustee Trust for the International Brotherhood of Electrical
Workers' Pension Benefit Fund 900 Seventh Street, NW Washington, DC 20001
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