VZ » Topics » Summary of 2008 Compensation Program
This excerpt taken from the VZ DEF 14A filed Mar 23, 2009.
Summary of 2008 Compensation Program
The following highlights significant aspects
of the Companys 2008 compensation program.
Encourage executives to both increase short-term performance and create long-term growth by linking a significant portion of their compensation opportunities to the achievement of these
Provide total compensation opportunities that attract, retain and motivate talented and diverse executives.
Single Peer Group. In 2008, the Committee began using a single peer group of large capitalization companies to benchmark both compensation opportunities and long-term stock
performance. The Committee believes that using this single peer group better reflects the overall market environment for a large company like Verizon and will make it easier for shareholders to evaluate the design and effectiveness of Verizons
compensation programs. In prior years, the Committee used more than one peer group for these purposes.
Benchmarking Total Compensation. Beginning in 2008, the Committee benchmarked each executives total compensation opportunity instead of separately evaluating each
element of compensation, using a single peer group to evaluate total compensation. By evaluating the total compensation opportunity, the Committee is able to provide a competitive program, while having the ability to differentiate among individual
pay elements in order to address retention needs and reflect an executives specific experience.
Company-Wide Performance Measures. The Committee believes that shareholders and the investment community generally assess Verizon based on Company-wide performance with
respect to top line revenue growth and bottom line adjusted earnings per share. The Committee also believes that in order to achieve these performance objectives, the executives must successfully manage each of the underlying business segments.
After reviewing best practices, trends in compensation matters and input from large institutional investors, the Committee determined that for 2008, the short-term incentive compensation opportunities for all of the named executive officers would be
based on the same set of Company-wide performance measures, rather than multiple measures of business segment performance.
The Committee targeted total compensation opportunities to fall within the 60th to 65th percentile of the Related Dow Peers. This peer group is described on pages 30-31.
In consultation with the Consultant, the Committee reviewed competitive market pay practices to determine whether base salary increases were advisable. After considering this information, the
Committee determined that for 2008, the data supported base salary increases for the named executive officers other than the CEO ranging from 3% to 6%, and it recommended to the Board, and the Board concurred, that it was not necessary to adjust the
base salary of the CEO.
Based on the Companys performance against the measures the Committee established at the beginning of the year, the 2008 short-term incentive awards were paid at 95% of their targeted
level for all of the named executive officers.
Based on the Companys performance against the measures the Committee established at the beginning of the 20062008 performance cycle, Verizons named executive officers each
earned 123% of the number of performance stock units that were granted to them as part of their long-term incentive award opportunity for that three-year performance cycle. They also received dividend equivalent units on the portion of the award
that was paid to them. The named executive officers, other than the CEO, received a portion of their long-term incentive award in the form of restricted stock units as described on page 35.
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