This excerpt taken from the VZ DEF 14A filed Mar 23, 2009.
Role of Benchmarking and the Related Dow Peers
In order to determine whether the compensation opportunities for executives are appropriate and competitive, the Committee compares each named executive officers total compensation opportunity to the total compensation opportunities for executives in comparable positions at peer companies. Prior to 2008, the Committee used an industry peer group and a market peer group for this purpose. In 2008, the Committee began using a single peer group that includes the 29 companies (other than Verizon) in the Dow Jones Industrial Average, plus Verizons four largest competitors that are not included in the Dow Jones Industrial Average. This group is referred to as the Related Dow Peers.
In the Committees view, the Related Dow Peers represent Verizons primary competitors for executive talent and investor dollars. In addition, the ongoing consolidation in the telecommunications industry has greatly reduced the number of similarly-sized industry competitors, and a variety of non-traditional competitors have entered the marketplace. As a result of these changes, the Industry Peers no longer represent the most relevant standard for comparison. Accordingly, the Committee determined that it was appropriate to benchmark both total compensation opportunities and Verizons relative stock performance under its long-term incentive plan against the Related Dow Peers.
The Committee also believes that this group of companies, which is reflected in an established and recognizable index that includes both similarly-sized companies and Verizons largest industry competitors, provides a consistent measure of Verizons performance and makes it easier for shareholders to evaluate, monitor and understand Verizons compensation program.
The following chart lists the companies included in the Related Dow Peers as of December 31, 2008. It shows their net income, annual revenue and total employees as reported as of each companys 2008 fiscal year-end, and it also shows each companys market capitalization based on publicly available market data as of December 31, 2008.