U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
NOTICE OF EXEMPT SOLICITATION
1. Name of the Registrant:
VERIZON COMMUNICATIONS, INC.
2. Name of person relying on exemption:
ASSOCIATION OF BELLTEL RETIREES, C. WILLIAM JONES, MICHAEL S.
MICHAEL S. KUCKLINCA, EILEEN T. LAWRENCE, JOHN SELLEN,
JOHN M. BRENNAN, JAMES E. CASEY, JR., LOUIS MIANO,
JOHN A. PARENTE, ROBERT E. REHM AND JOSEPH A. RISTUCCIA
3. Address of person relying on exemption:
P.O. Box 33, Cold Spring Harbor, NY 11724
4. Written materials. Attach written materials required to be
submitted pursuant to Rule 14a-6(g)(1) [sec. 240.14a-6(g)(1)]
Association of BellTel Retirees, Inc.
Post Office Box 33
Cold Spring Harbor, New York 11724 (logo)
_________________________________________________________________
Phone: (631) 367-3067 Web Site: www.belltelretirees.org
Fax: (631) 367-1190 E-mail: association@belltelretirees.org
March 29, 2002
Board of Directors
C. William Jones DEAR FELLOW VERIZON SHAREHOLDER:
President
(410) 770-9485 We urge you to VOTE FOR three important
shareholder resolutions on Verizon's
Michael S. Kucklinca proxy card for the upcoming Annual
Executive Vice President Meeting on April 24 in Minneapolis.
(516) 741-2424
PROXY ITEM NO. 6 deserves your special
Eileen T. Lawrence attention and support. We believe it is
Treasurer critical that executive compensation be
(718) 229-6078 tied more closely to a truly relevant
and transparent measure of operating
John Sellen income. The resolution in Proxy Item
Secretary No. 6 asks the Board to determine future
(201) 261-1454 awards of performance-based compensation
for executive officers using a measure
John M. Brennan of earnings that does NOT include
Director - accounting rule income, particularly
BA South "pension credits" resulting from
(201) 666-8174 projected increases in the employee
pension fund surplus.
James E. Casey, Jr.
Vice President - WE URGE YOU TO VOTE YOUR PROXY
Information Systems FOR PROPOSALS 4, 5 AND 6.
(540) 439-9568
In recent years a substantial portion of
Louis Miano Verizon's reported earnings has not been
Vice President - cash flow from ordinary operations, but
Public Relations rather accounting credits from projected
(781) 444-8080 increases in the employee pension fund
surplus. According to Merrill Lynch,/1/
John A. Parente in 2000 Verizon used pension credits
Vice-President - to boost its reported earnings by $3.5
Membership Dev. billion, the largest contribution to
(518) 372-0526 reported earnings among all S&P 500
companies./2/
Robert A. Rehm
Vice President - "THE MAGNITUDE OF THE PENSION CREDIT
Finance INCREASE RELATIVE TO THE CHANGE IN NET
(516) 827-0801 INCOME CLEARLY IS AN ADVERSE ISSUE WHEN
ASSESSING THE QUALITY OF VERIZON'S
Joseph A. Ristuccia EARNINGS." - - MERRILL LYNCH/3/
Vice President
Government Relations During the first six months of 2001,
(631) 765-1111 Verizon's $1.1 billion in pension
credits actually EXCEEDED the $733
million in net income before
extraordinaries reported to
shareholders. Because pension credits
potentially can turn even operating
losses into reported gains, we believe
that they should not be included in the
benchmark for performance-based pay.
We agree with proponents that increases
in the pension surplus should NOT be
used to calculate performance-based
compensation for the following reasons:
PENSION SURPLUSES DO NOT MEASURE
OPERATING PERFORMANCE. "The pension
aspect of performance has nothing to do
with the current performance of
management," according to the publisher
of THE ANALYST'S ACCOUNTING OBSERVER./4/
Pension credits do nothing to increase
cash flow. In practice, the pension
surplus is not available to pay
dividends, finance investments, or for
other operating purposes.
________________
/1/ Merrill Lynch, "Making Sense of
Pensions," August 1, 2001.
/2/ David Henry, "Why Earnings Are Too
Rosy," BUSINESS WEEK, August 13, 2001;
Credit Suisse First Boston, "Pension
Accounting Primer," June 13, 2001.
/3/ Merrill Lynch, "Making Sense of
Pensions," August 1, 2001.
/4/ Jack Ciesielski, "Pondering
Pensions: Addendum," THE ANALYST'S
ACCOUNTING OBSERVER, June 11, 2001.
PENSION CREDITS CAN BE "PHANTOM INCOME." Pension income often
does not even reflect actual pension investment gains, since the
credits are based entirely on "expected returns" using
assumptions set by management. Verizon's 10-K filing for 2000
revealed that although the $3.5 billion pension credit to
earnings was premised on an "expected return" on pension assets
of $4.7 billion, the ACTUAL return was $1.3 billion.
WE ALSO URGE YOU TO SUPPORT TWO OTHER SHAREHOLDER PROPOSALS ON
THE 2002 PROXY:
- - ITEM NO. 4 REQUESTS ADVANCE SHAREHOLDER APPROVAL FOR FUTURE
GOLDEN PARACHUTE" SEVERANCE AGREEMENTS WITH THE COMPANY'S TOP
EXECUTIVE OFFICERS.
Verizon's executive officers are covered by lucrative parachute
provisions that can be triggered not only by a hostile change of
control, but even by VOLUNTARY resignation under a range of
circumstances we believe are contrary to shareholder interests.
For example, if co-CEO Ivan Seidenberg had resigned during 2001
under this broad "change of control" definition, he would have
received $10 million in "Incentive Awards" and, through June
2004, continuation of his base pay ($1.5 million) plus 10.5 times
base pay each year in short- and long-term bonuses (the maximum
he could have earned). Co-CEO Charles Lee's parachute is even
more generous, in our view, as he could have received nearly the
same compensation whether he decided to stay or leave.
- - ITEM NO. 5 URGES THE BOARD TO AMEND THE BY-LAWS TO REQUIRE A
MAJORITY OF INDEPENDENT DIRECTORS AND LIMIT THE NUMBER OF
"INSIDERS" TO TWO.
Our Board's lack of independence is unusual among leading public
companies. Among S&P 500 companies, 89% have a majority of
independent directors, as defined by the Council of Institutional
Investors./5/ In contrast, at least eight of Verizon's 16
directors are non-independent. In addition to the two co-CEOs,
six outside directors are viewed as non-independent due to board
interlocks or because their own employer receives grants, fees,
or business from the Company, or did in the recent past. While
the Board claims it is sufficiently independent based on its own
more permissive definition, we believe that a By-Law based on
CII's definition of "independent" is needed to ensure the Board
is at all times more accountable to stockholders than it is
beholden to management.
I hope you will join me and VOTE YOUR SHARES YES ON PROXY ITEMS
4, 5 and 6.
Sincerely yours,
C. William Jones
President, Association of BellTel Retirees Inc.
(text box)
The cost of this letter is being borne entirely by the
Association of BellTel Retirees. This is not a solicitation.
Please DO NOT send your proxy card to the Association.
Permission to quote articles and reports cited in this letter has
neither been sought nor obtained.
/5/ Investor Responsibility Research Center, "Board Practices/
Board Pay 2001," p. 10, which also estimates that 69% of all S&P
500 directors are independent using a definition of "independent"
that is virtually identical to the one adopted by proponents here
and by the Council of Institutional Investors.