Verizon Communications (VZ)

(b) Performance Requirement.

(1) General. The PSUs shall become payable based on Verizon’s Return on Equity during the three-year period beginning January 1, 2010, and ending at the close of business on December 31, 2012 (the “Award Cycle”). No PSUs shall become payable unless the Committee determines that certain threshold performance requirements have been satisfied. The formula for determining the total number of PSUs that may become payable (the “Payout Formula”) will equal the number of PSUs that the Participant is granted as described in paragraph 4 (plus any additional PSUs added with respect to DEUs credited over the Award Cycle) times the Verizon Vested Percentage (as defined below). For example, if (a) the Participant is granted 1,000 PSUs, and (b) those PSUs are credited with an additional 200 PSUs as a result of DEUs paid over the Award Cycle, and (c) the Verizon Vested Percentage is 50%, the Participant will vest in (1,000 PSUs + 200 PSUs from DEUs) times 50%, or 600 PSUs, which shall be payable in shares of Verizon common stock as described in paragraph 6.

(2) Definitions. For purposes of the performance requirement and Payout Formula set forth in paragraph 5(b)(1) –

(i) “Verizon Vested Percentage” shall be an amount (between 0% and 200%), which is based on Verizon’s Return on Equity during the Award Cycle, as provided in the following table:

(ii) The Committee shall have the discretion to determine the applicable Verizon Vested Percentage to the extent that Verizon’s Return on Equity during the Award Cycle is greater than 8% but less than 17%; provided that such Vested Percentage must be between 50% and 150%. If Verizon’s Return on Equity during the Award Cycle does not exceed 8%, then no Award will be payable under this Agreement. If Verizon’s Return on Equity during the Award Cycle is 17% or higher, then the maximum Vested Percentage of 200% shall be payable.

(iii) “Return on Equity” shall have the same meaning as described in Section 2.20 of Verizon’s 2009 Short-Term Incentive Plan. Measurement periods may vary between and/or during an Award Cycle, and may or may not be coextensive with the Award Cycle. The Committee retains the discretion to determine and to change the measurement periods which shall be used to calculate the Return on Equity during the Award Cycle, both before and during the Award Cycle.

(c) Three-Year Continuous Employment Requirement. Except as otherwise determined by the Committee, or except as

otherwise provided in paragraph 7(b) or 7(c), the PSUs shall vest only if the Participant is continuously employed by the Company or a Related Company (as defined in paragraph 13) from the date the PSUs are granted through the end of the Award Cycle.

(d) Transfer. Transfer of employment from Verizon to a Related Company, from a Related Company to Verizon, or from one Related Company to another Related Company shall not constitute a separation from employment hereunder, and service with a Related Company shall be treated as service with the Company for purposes of the three-year continuous employment requirement in paragraph 5(c).

6. Payment. All payments under this Agreement shall be made in shares of Verizon common stock. Payments shall be made as soon as practicable after the end of the Award Cycle (but in no event later than March 15, 2013). The number of shares that shall be paid (plus withholding for taxes and any applicable deferral amount) shall equal the number of vested PSUs (as provided in paragraph 5(b)). If the Participant dies before any payment due hereunder is made, such payment shall be made to the Participant’s beneficiary, as designated under paragraph 11. Once a payment has been made with respect to a PSU, the PSU shall be canceled; however, all other terms of the Agreement, including but not limited to the Participant’s Obligations, shall remain in effect. Moreover, the Participant is required to hold all shares that are paid under the terms of this Agreement for a minimum of two years after the date the shares become payable. Thus, the Participant is required to hold all shares paid under this Agreement at least through December 31, 2014. Such restriction shall not apply it the Participant dies or becomes disabled at any time prior to the end of this two-year holding period.

7. Early Cancellation/Accelerated Vesting of PSUs. Subject to the provisions of paragraph 5, PSUs may vest or be forfeited before vesting as follows:

(b) Performance Requirement.

(1) General. The PSUs shall become payable based on the total shareholder return (“TSR”) of Verizon’s common stock during the three-year period beginning January 1, 2009, and ending at the close of business on December 31, 2011 (the “Award Cycle”), relative to the TSR of the companies (other than Verizon) in the Dow Jones Industrial Average (Dow) Index and also including the four largest industry companies that are not in the Dow during the same three-year period. The companies (other than Verizon) in the Dow, together with the four largest industry companies that are not in the Dow, are collectively referred to as the “Related Dow Peers.” No PSUs shall become payable unless the Committee determines that certain threshold performance requirements have been satisfied. The formula for determining the total number of PSUs that may become payable (the “Payout Formula”) will equal the number of PSUs that the Participant is granted as described in paragraph 4 (plus any additional PSUs added with respect to DEUs credited over the Award Cycle) times the Verizon Vested Percentage (as defined below). For example, if (a) the Participant is granted 1,000 PSUs, and (b) those PSUs are credited with an additional 200 PSUs as a result of DEUs paid over the Award Cycle, and (c) the Verizon Vested Percentage is 75%, the Participant will vest in (1,000 PSUs + 200 PSUs from DEUs) times 75%, or 900 PSUs, which shall be payable in cash as described in paragraph 6.

(2) Definitions. For purposes of the performance requirement and Payout Formula set forth in paragraph 5(b)(1)—

(i) “Verizon Vested Percentage” shall be an amount (between 0% and 200%), which is based on Verizon’s Relative TSR Position, as provided in the following table:

(ii) “Verizon Relative TSR Position” shall be based upon Verizon’s rank during the Award Cycle among the Related Dow Peers in terms of TSR. The Committee retains the discretion to determine the Verizon Vested Percentage and the Verizon Relative TSR Position for any period and the Committee also retains the discretion to substitute, add or eliminate the additional industry companies that are not in the Dow but are included in the Related Dow Peers. The Committee will make adjustments for any changes made to the Dow during the Award Cycle.

(iii) “TSR” or “Total Shareholder Return” shall mean the change in the price of a share of common stock from the beginning of a period until the end of such period (the “Measurement Period”), adjusted to reflect the reinvestment of dividends (if any) and as may be necessary to take into account stock splits or other events similar to those described in Section 4.3 of the Plan. Measurement Periods may vary between and/or during an Award Cycle, and may or may not be coextensive with the Award Cycle. The Committee retains the discretion to determine and to change the Measurement Periods which shall be used to calculate TSRs for the Award Cycle, both before and during the Award Cycle.

(c) Three-Year Continuous Employment Requirement. Except as otherwise determined by the Committee, or except as otherwise provided in paragraph 7(b) or 7(c), the PSUs shall vest only if the Participant is continuously employed by the Company or a Related Company (as defined in paragraph 13) from the date the PSUs are granted through the end of the Award Cycle.

(d) Transfer. Transfer of employment from Verizon to a Related Company, from a Related Company to Verizon, or from one Related Company to another Related Company shall not constitute a separation from employment hereunder, and service with a Related Company shall be treated as service with the Company for purposes of the three-year continuous employment requirement in paragraph 5(c). If the Participant transfers employment pursuant to this paragraph 5(d), the Participant will still be required to satisfy the definition of “Retire” under paragraph 7 of this Agreement in order to be eligible for the accelerated vesting provisions in connection with a retirement.

6. Payment. All payments under this Agreement shall be made in cash. As soon as practicable after the end of the Award Cycle (but in no event later than March 15, 2012), except as described in paragraph 7(c), the value of the vested PSUs (minus any withholding for taxes) shall be paid to the Participant (subject, however, to any deferral application that the Participant has made under the deferral plan (if any) then available to the Participant). The amount of cash that shall be paid (plus withholding for taxes and any applicable deferral amount) shall equal the number of vested PSUs (as provided in paragraph 5(b)) times the closing price of Verizon’s common stock on the NYSE as of the last trading day in the Award Cycle (or the closing price on the effective date of the Change in Control, in the case of a payment made under paragraph 7(c)). If the Participant dies before any payment due hereunder is made, such payment shall be made to the Participant’s beneficiary, as designated under paragraph 11. Once a payment has been made with respect to a PSU, the PSU shall be canceled; however, all other terms of the Agreement, including but not limited to the Participant’s Obligations, shall remain in effect.

7. Early Cancellation/Accelerated Vesting of PSUs. Subject to the provisions of paragraph 7(c) and 5, PSUs may vest or be forfeited before vesting as follows:

(b) Performance Requirement.

(1) General. The PSUs shall become payable based on the total shareholder return (“TSR”) of Verizon’s common stock during the three-year period beginning January 1, 2008, and ending at the close of business on December 31, 2010 (the “Award Cycle”), relative to the TSR of the companies (other than Verizon) in the Dow Jones Industrial Average (Dow) Index and also including the four largest industry companies that are not in the Dow during the same three-year period. The companies (other than Verizon) in the Dow, together with the four largest industry companies that are not in the Dow, are collectively referred to as the “Related Dow Peers.” No PSUs shall become payable unless the Committee determines that certain threshold performance requirements have been satisfied. The formula for determining the total number of PSUs that may become payable (the “Payout Formula”) will equal the number of PSUs that you are granted as described in paragraph 4 (plus any additional PSUs added with respect to DEUs credited over the Award Cycle) times the Verizon Vested Percentage (as defined below). For example, if (a) you are granted 1,000 PSUs, and (b) those PSUs are credited with an additional 200 PSUs as a result of DEUs paid over the Award Cycle, and (c) the Verizon Vested Percentage is 75%, you will vest in (1,000 PSUs + 200 PSUs from DEUs) times 75%, or 900 PSUs, which shall be payable in cash as described in paragraph 6.

(2) Definitions. For purposes of the performance requirement and Payout Formula set forth in paragraph 5(b)(1)—

(i) “Verizon Vested Percentage” shall be an amount (between 0% and 200%), which is based on Verizon’s Relative TSR Position, as provided in the following table:

(ii) “Verizon Relative TSR Position” shall be based upon Verizon’s rank during the Award Cycle among the Related Dow Peers in terms of TSR. The Committee retains the discretion to determine the Verizon Vested Percentage and the Verizon Relative TSR Position for any period and the Committee also retains the discretion to substitute, add or eliminate the additional industry companies that are not in the Dow but are included in the Related Dow Peers. The Committee will make adjustments for any changes made to the Dow during the Award Cycle.

(iii) “TSR” or “Total Shareholder Return” shall mean the change in the price of a share of common stock from the beginning of a period until the end of such period (the “Measurement Period”), adjusted to reflect the reinvestment of dividends (if any) and as may be necessary to take into account stock splits or other events similar to those described in Section 4.3 of the Plan. Measurement Periods may vary between and/or during an Award Cycle, and may or may not be coextensive with the Award Cycle. The Committee retains the discretion to determine and to change the Measurement Periods which shall be used to calculate TSRs for the Award Cycle, both before and during the Award Cycle.

(c) Three-Year Continuous Employment Requirement. Except as otherwise determined by the Committee, or except as otherwise provided in paragraph 7(b) or 7(c), the PSUs shall vest only if the Participant is continuously employed by the Company or a Related Company (as defined in paragraph 13) from the date the PSUs are granted through the end of the Award Cycle.

(d) Transfer. Transfer of employment from Verizon to a Related Company, from a Related Company to Verizon, or from one Related Company to another Related Company shall not constitute a separation from employment hereunder, and service with a Related Company shall be treated as service with the Company for purposes of the three-year continuous employment requirement in paragraph 5(c). If the Participant transfers employment pursuant to this paragraph 5(d), the Participant will still be required to satisfy the definition of “Retire” under paragraph 7 of this Agreement in order to be eligible for the accelerated vesting provisions in connection with a retirement.

6. Payment. All payments under this Agreement shall be made in cash. As soon as practicable after the end of the Award Cycle (but in no event later than March 15, 2011), except as described in paragraph 7(c), the value of the vested PSUs (minus any withholding for taxes) shall be paid to the Participant (subject, however, to any deferral application that the Participant has made under the deferral plan (if any) then available to the Participant). The amount of cash that shall be paid (plus withholding for taxes and any applicable deferral election) shall equal the number of vested PSUs (as provided in paragraph 5(b)) times the closing price of Verizon’s common stock on the NYSE as of the last trading day in the Award Cycle (or the closing price on the effective date of the Change in Control, in the case of a payment made under paragraph 7(c)). If the Participant dies before any payment due hereunder is made, such payment shall be made to the Participant’s beneficiary, as designated under paragraph 11. Once a payment has been made with respect to a PSU, the PSU shall be canceled; however, all other terms of the Agreement, including but not limited to the Participant’s Obligations, shall remain in effect.

7. Early Cancellation/Accelerated Vesting of PSUs. Subject to the provisions of paragraph 7(c) and 5, PSUs may vest or be forfeited before vesting as follows: