Notice of Annual

Meeting of Shareholders

 

To Our Shareholders:

A Message from Hans Vestberg, our Chair & CEO and Clarence Otis, Jr., our Lead Director

 

 

 

 

 

Table of Contents

 

 

 

Proxy Summary

This summary highlights information contained in the proxy statement and does not contain all of the information you should consider. We encourage you to read the entire proxy statement before voting. For information regarding Verizon’s 2020 performance, please read Verizon’s 2020 Annual Report on Form 10-K.

 

Moving the world forward in challenging times

2020 was a year like no other. As we navigated unprecedented challenges, we found new ways of working, new ways of interacting with our customers and new ways of bringing our employees together in order to continue to provide the best-in-class resilient and reliable networks that our communities depend on. When COVID-19 began spreading across the United States early in the year, Verizon immediately took wide-ranging, proactive steps to support all of our stakeholders through the crisis.

 

 

Our ability to handle great shifts in network usage and demand is the result of years of investment in our networks to allow for greater capacity and speed. Verizon’s team members on the front line take great pride in providing our communities with the nation’s best networks when it matters most, and look forward to doing so in 2021 and beyond.

 

Verizon 2021 Proxy Statement    i

Agenda and Voting Recommendations

 

		Item 1 Election of Directors   The Board of Directors recommends that you vote FOR the election of the Board’s nominees.
		The Board’s nominees are all proven leaders with a strong sense of integrity and respect for differing viewpoints. As a group they bring a mix of backgrounds, perspectives, skills and experiences that contributes to a well-rounded Board uniquely positioned to effectively oversee Verizon’s strategy and businesses. Additional information about the Director candidates and their respective qualifications begins on page 1.

 

 

ii    Verizon 2021 Proxy Statement

 

 

    

 

Our Nominees at a Glance

 

 

 

Committee Membership*

Name

Director   Since

Audit

Corporate   Governance   and Policy

Finance

Human   Resources

Key Skills and Experience

Shellye L. Archambeau, 58 Former Chief Executive Officer, MetricStream, Inc. Independent

2013

Marketing Risk Management Technology

Roxanne S. Austin, 60 President and CEO, Austin Investment Advisors Independent

2020

***

Cybersecurity Financial Expertise Strategic Planning

Mark T. Bertolini, 64 Former Chairman and CEO, Aetna Inc. Independent

2015

Financial Expertise Regulatory/Public Policy Strategic Planning

Melanie L. Healey, 59 Former Group President, The Procter & Gamble Company Independent

2011

Consumer/B2B/Retail Marketing Strategic Planning

Clarence Otis, Jr., 64 Former Chairman and CEO, Darden Restaurants, Inc. Independent Lead Director

2006

Consumer/B2B/Retail Financial Expertise Risk Management

Daniel H. Schulman, 63 President and CEO, PayPal Holdings, Inc. Independent

2018

Cybersecurity Strategic Planning Technology

Rodney E. Slater, 66 Partner, Squire Patton Boggs LLP Independent

2010

Regulatory/Public Policy Risk Management Strategic Planning

Hans Vestberg, 55 Chairman and CEO, Verizon Communications Inc.

2018

Strategic Planning Technology Telecommunications

Gregory G. Weaver, 69 Former Chairman and CEO, Deloitte & Touche LLP Independent

2015

Financial Expertise Risk Management Strategic Planning

*Ages and Committee memberships are as of March 29, 2021.                     Committee Chair         Audit Committee Financial Expert

***Consistent with Verizon’s Director onboarding program, Ms. Austin is currently attending all Committee meetings and has not yet been assigned to a Committee.

 

Verizon 2021 Proxy Statement    iii

 

Governance Highlights

Our Board has adopted robust governance structures and practices to enhance our independent oversight, effectiveness and accountability to shareholders.

 

Independent      Oversight		•   8 of our 9 Directors are independent   •   Strong independent Lead Director with clearly delineated duties   •   Regular executive sessions of independent Directors
Board      Effectiveness		•   Active Board refreshment plan with commitment to diversity   •   Orientation program for new Directors and continuing education for all Directors   •   Limits on other public board service   •   Annual Board and committee assessments   •   Average tenure goal for independent Directors
Accountability to      Shareholders		•   Annual election of all Directors by majority voting   •   Shareholder right to call special meetings   •   Proxy access right with market terms   •   No poison pill or dual-class shares   •   Robust stock ownership requirements for executive officers and Directors   •   Proactive year-round shareholder engagement program
New in      2020		•   Lowered special meeting ownership threshold to 15%   •   Included SASB Index in expanded and enhanced Environmental, Social and Governance (ESG) Report   •   Issued inaugural TCFD Report   •   Published Consolidated EEO-1 and Diversity Representation Reports   •   Published alignment with Investor Stewardship Group’s corporate governance principles   •   Published Green Financing Framework and issued a second US$1 billion green bond   •   Launched ESG Resources Hub and Digital Security & Tech Hub on corporate website   •   Launched Citizen Verizon, our responsible business plan for economic, social and environmental advancement

 

iv    Verizon 2021 Proxy Statement

 

 

		Item 2 Advisory Vote to Approve Executive Compensation   The Board of Directors recommends that you vote FOR this proposal.
		We are asking shareholders to approve, on an advisory basis, the compensation of our named executive officers as described in the Compensation Discussion and Analysis and Compensation Tables beginning on page 26.

Executive Compensation Program Highlights

Our executive compensation program reflects Verizon’s commitment to industry-leading compensation and governance practices. The program is discussed in detail in the Compensation Discussion and Analysis beginning on page 26.

 

Compensation Strategy		•   Align executives’ and shareholders’ interests •   Attract, retain and motivate high-performing executives
Pay-for-Performance      Essentials		•   Extensive focus on variable, incentive-based pay •   Defined benefit pension and supplemental executive retirement benefits frozen in 2006 •   ESG metric in Short-Term Incentive Plan
Best Practice      Highlights		•   Shareholder approval policy for severance benefits •   No cash severance benefits for the CEO •   Significant executive share ownership requirements •   Clawback policies •   Anti-hedging policy •   No tax gross-ups •   No executive employment agreements
New in      2020		Changes to 2020 Short-Term Incentive Program   •   Replaced adjusted earnings per share (EPS) with adjusted operating income as a performance metric at the corporate level •   Introduced unit-specific financial and operational performance metrics and qualitative leading indicators for business unit employees •   Increased the weight of ESG metrics   Changes to 2020 Long-Term Incentive Program   •   Incorporated adjusted EPS as a performance metric in addition to free cash flow for Performance Stock Units (PSUs) •   Retained relative total shareholder return as a modifier to the PSU vesting percentage •   Implemented pro-rated vesting upon an involuntary termination of employment from the company without cause commencing with 2020 awards

 

Verizon 2021 Proxy Statement    v

 

2020 Compensation

The summary below shows the 2020 compensation for each of our named executive officers, as required to be reported in the Summary Compensation table pursuant to U.S. Securities and Exchange Commission (SEC) rules. Please see the notes accompanying the Summary Compensation table beginning on page 44 for more information.

 

Name and Principal Position		Salary ($)				Bonus ($)				Stock Awards ($)				Option Awards ($)				Non-Equity Incentive Plan Compensation ($)				Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)				All Other Compensation ($)				Total ($)
Hans Vestberg Chairman and Chief Executive Officer			1,500,000				0				13,300,074				0				3,637,500				0				660,008				19,097,582
Matthew D. Ellis Executive Vice President and Chief Financial Officer			950,000				0				6,250,058				0				1,382,250				0				243,960				8,826,268
Ronan Dunne Executive Vice President and Group CEO – Verizon Consumer			1,000,000				0				6,750,003				0				1,185,000				0				312,878				9,247,881
Tami A. Erwin Executive Vice President and Group CEO – Verizon Business			850,000				0				5,750,055				0				1,364,250				66,567				236,922				8,267,794
K. Guru Gowrappan Executive Vice President and Group CEO – Verizon Media			850,000				0				5,750,055				0				1,032,750				0				210,070				7,842,875

 

		Item 3 Ratification of Auditors   The Board of Directors recommends that you vote FOR ratification.
		We are asking shareholders to ratify the Audit Committee’s appointment of Ernst & Young LLP as Verizon’s independent registered public accounting firm for 2021. Information on fees paid to Ernst & Young in 2020 and 2019 appears on page 57.
		Items 4-6 Shareholder Proposals   The Board of Directors recommends that you vote AGAINST each of the shareholder proposals.
		In accordance with SEC rules, we have included in this proxy statement proposals submitted by shareholders for consideration. The proposals can be found beginning on page 62.

 

 

Meeting Information   Date and Time  May 13, 2021 at 10:00 a.m., Eastern Daylight Time   Online Virtual Meeting  The meeting will be held virtually via the Internet at www.virtualshareholdermeeting.com/VZ2021, where you will be able   to vote electronically and submit questions during the meeting.   Record Date  March 15, 2021   Meeting Access, Submission of Questions and Voting  Information can be found beginning on page 68.

 

vi    Verizon 2021 Proxy Statement

 

Governance

Item 1: Election of Directors

Election Process

Verizon’s Directors are elected annually for a term of one year. We believe annual elections are consistent with good corporate governance because they foster director accountability and increase shareholder confidence. Verizon’s bylaws require Directors to be elected by a majority of the votes cast in an uncontested election.

Director Nominations

The Corporate Governance and Policy Committee considers and recommends candidates for our Board. The Committee reviews all nominations submitted to Verizon, including individuals recommended by shareholders, Directors or members of management. The Committee also retains executive search firms from time to time to help identify and evaluate potential candidates.

Any shareholder who wishes to recommend a Director candidate to the Committee for its consideration should write to the Assistant Corporate Secretary at the address given under “Contacting Us.” A recommendation for a Director candidate should include the candidate’s name, biographical data and a description of the candidate’s qualifications in light of the requirements described below. If we make any material changes to the Committee’s procedure for considering and nominating candidates, we will file a report with the Securities and Exchange Commission (SEC) and post the information on the Corporate Governance section of our website at www.verizon.com/about/investors/corporate-governance.

The Committee specifically reviews the qualifications of each candidate for election or re-election. For incumbent Directors, this review includes the Director’s participation in and contributions to the activities of the Board, the Director’s independence and past meeting attendance and whether the Director’s skills and expertise continue to align with Verizon’s long-term business strategy. After the Committee evaluates all candidates for Director, it presents its recommendation to the Board. The Committee also discusses with the Board any candidates who were considered by the Committee but not recommended for election or re-election.

Before they are nominated, each candidate for election and each incumbent Director standing for re-election must consent to stand for election or re-election and provide certain representations required under Verizon’s bylaws. Each candidate who is standing for election must also submit an irrevocable resignation, which will only become effective if (i) our Board or any Committee determines that any of the required representations were untrue in any material respect or that the candidate breached any obligation under Verizon’s bylaws or (ii) the candidate does not receive a majority of the votes cast at the annual meeting of shareholders and the independent members of our Board decide to accept the resignation. Any decision about a resignation following an incumbent Director’s failure to obtain a majority of the votes cast will be disclosed within 90 days after the election results are certified.

Shareholders wishing to nominate a Director should follow the procedures set forth in Verizon’s bylaws and summarized on page 72.

Director Criteria, Qualifications and Experience

To be eligible for consideration, any proposed candidate must:

 

•

Possess exemplary ethics and integrity

 

•

Have proven judgment and competence

 

Verizon 2021 Proxy Statement    1

Item 1: Election of Directors

Nominees for Election

 

 

•

Have professional skills and experience that align with the needs of Verizon’s long-term business strategy and complement the experience represented on the Board

 

•

Have demonstrated the ability to act independently and be willing to represent the long-term interests of all shareholders and not just those of a particular constituency or perspective

 

•

Be willing and able to devote sufficient time to fulfill responsibilities to Verizon and our shareholders

Our Board’s commitment to refreshment and succession planning is at the core of its ability to maintain independence of thought and action. Key factors the Committee considers when nominating Directors and refreshing the Board include:

 

•

Diversity – The Committee recognizes that a diverse set of viewpoints and practical experiences enhances the effectiveness of our Board. In evaluating candidates, the Committee considers how a candidate’s particular background, experience, qualifications, attributes and skills may complement, supplement or duplicate those of other prospective candidates. The Committee seeks a diverse group of candidates who possess the requisite judgment, background, skill, expertise and time, as well as diversity with respect to race, ethnicity and gender, to strengthen and increase the diversity, breadth of skills and qualifications of the Board.

 

•

Experience – The Committee strives to maintain a Board with a wide range of leadership experience and skills relevant to Verizon’s strategic vision.

 

•

Age and tenure – The Committee believes it is important to bring new perspective and talents to the Board on a regular basis. Verizon does not have term limits for Directors because the Board recognizes that Directors who have served on the Board for an extended period can provide valuable insight into Verizon’s operations and future based on their experience with, and understanding of, Verizon’s history, policies and objectives. As an alternative to term limits, the Board seeks to maintain an average tenure of nine years or less for its independent Directors. Under the Corporate Governance Guidelines, a Director must retire from the Board the day before the annual meeting of shareholders that follows his or her 72nd birthday.

 

•

Board size – The Committee periodically evaluates whether to change the size of the Board based on the Board’s needs and the availability of qualified candidates.

 

•

Board dynamics – The Committee considers each Director candidate’s individual contribution or potential contribution to the Board as a whole and strives to maintain one hundred percent active and collaborative participation.

Nominees for Election

Our Board has nominated the 9 candidates below for election as Directors, all of whom currently serve as Directors of Verizon. Ms. Austin was elected to the Board in October 2020 as an independent Director; she was recommended by an executive search firm retained by the Corporate Governance and Policy Committee.

Each candidate has consented to stand for election, and we do not anticipate that any candidate will be unavailable to serve. If any candidate were to become unavailable before the election, the proxy committee could vote the shares it represents for a substitute named by the Board. Each candidate has submitted an irrevocable, conditional letter of resignation that our Board will consider if that candidate fails to receive a majority of the votes cast.

Biographical information for each Director nominee follows. We have included career highlights and the key skills and experience that we believe each Director nominee brings to our Board, as well as their other public board directorships. All of our nominees bring more qualifications to the Board than those highlighted in their biographies, and these are reflected in the aggregate Board composition statistics provided in the Proxy Summary. When deciding to re-nominate these Directors, the Corporate Governance and Policy Committee and the Board considered each Director’s individual qualifications, as well as the aggregate of skills and experience represented on the Board, in light of the Company’s strategy and expected future business needs.

 

		The Board of Directors recommends that you vote FOR the election of the following Director candidates.

 

2    Verizon 2021 Proxy Statement

Item 1: Election of Directors

Nominees for Election

 

 

Independent Director since: 2013   Age: 58   Committees: Audit Corporate Governance and Policy (Chair)						Independent Director since: 2020   Age: 60   Committees: Not Yet Assigned*   *Consistent with Verizon’s Director onboarding program, Ms. Austin is currently attending all Committee meetings and has not yet been assigned to a Committee.
Key Skills and Experience: •    Leadership: Highly regarded and accomplished executive with over 30 years of experience building and scaling consumer and B2B businesses in the technology industry. As CEO of MetricStream, led the company’s transformation into a leader in Governance, Risk and Compliance solutions.   •    Marketing: Served as Chief Marketing Officer at two public companies (Loudcloud and NorthPoint Communications), leading the design and implementation of all sales and marketing strategies and driving revenue growth. As President of Blockbuster.com, launched the entertainment retailer’s first online presence.   •    Risk Management: Acquired significant expertise with integrated enterprise risk management, regulatory compliance functions and quality, vendor and audit management software solutions across a wide array of industries during her tenure at MetricStream, as well as through service on the audit committees of Verizon, Okta and Arbitron.   •    Technology: Gained valuable experience developing and marketing emerging technology applications and solutions, including internet infrastructure, cloud-based and identity security services, business software platforms, e-commerce and digital media.   Career Highlights: •    MetricStream Inc., a leading provider of governance, risk, compliance and quality management ¡   Chief Executive Officer (2002-2018) •    Executive Positions at Loudcloud, Inc., NorthPoint Communications, Blockbuster Inc. and IBM (domestic and international) (1984-2002)   Other Public Company Boards: Nordstrom, Inc. (since 2015) Okta, Inc. (since 2018) Roper Technologies, Inc. (since 2018)						Key Skills and Experience: •    Leadership: Seasoned leader who served as CEO of Move Networks, President and COO of DIRECTV, and CFO of Hughes Electronics. Named 2018 Director of the Year – Corporate Leadership and Service by the Forum for Corporate Directors and one of the most influential directors in the board room by the National Association of Corporate Directors in 2013. Serves as co-chair of the annual Corporate Governance Conference at Northwestern’s Kellogg School of Management.   •    Cybersecurity: Acquired significant cybersecurity experience through her extensive management and operating roles in a range of technology industries, including service as a director of CrowdStrike, a leader in cloud-delivered endpoint protection.   •    Financial Expertise: Developed a comprehensive background in finance and accounting as a public company audit committee member, CFO of Hughes Electronics and a partner at Deloitte & Touche LLP. Chairs the U.S. Mid-Market Advisory Committee of EQT Partners.   •    Strategic Planning: Oversaw a dramatic turnaround of the business within one year of her arrival at DIRECTV, with cash flow increasing from negative $400 million annually to cash flow positive by $400 million, and revenue increasing by 40%. Overhauled customer service at DIRECTV, resulting in the company winning J.D. Power’s award ranking #1 in customer satisfaction.   Career Highlights: •    President and Chief Executive Officer of Austin Investment Advisors, a private investment and consulting firm (2003–Present) •    President and Chief Executive Officer of Move Networks, Inc., an IP-based television delivery service (2009–2010) •    President and Chief Operating Officer of DIRECTV, Inc., a digital television entertainment service (2001–2003) •    Chief Financial Officer and Various Executive Positions at Hughes Electronics Corporation (1993–2001) •    Audit Partner and Various Audit Positions at Deloitte & Touche LLP (1983–1993)   Other Public Company Boards: Abbott Laboratories Inc. (since 2000) AbbVie, Inc. (since 2013) CrowdStrike Holdings, Inc. (since 2018) Teledyne Technologies Incorporated (since 2006)** Target Corporation (2002-June 2020) Ericsson (2008-2016)   **Ms. Austin has notified Teledyne of her intent to resign from its Board of Directors at the company’s next annual meeting of stockholders to be held on April 28, 2021.

 

Verizon 2021 Proxy Statement    3

Item 1: Election of Directors

Nominees for Election

 

 

Independent Director since: 2015   Age: 64   Committees: Finance (Chair) Human Resources						Independent Director since: 2011   Age: 59   Committees: Corporate Governance and Policy Human Resources
Key Skills and Experience: •    Leadership: Recognized as an accessible, forward-thinking and solutions-oriented leader. Transformed Aetna from a traditional health insurance company to a consumer-oriented health care company focused on delivering holistic integrated care to local communities. Aetna served over 46 million people and CVS now serves its customers from over 10,000 locations.   •    Financial Expertise: Developed deep financial and risk management expertise in his executive roles at Aetna and as a Board member of MassMutual Life Insurance Company, a leading life insurance mutual company.   •    Regulatory/Public Policy: A national health care thought leader with extensive regulatory and public policy experience. Successfully navigated changes in the health insurance marketplace resulting from the Affordable Care Act and led Aetna through antitrust reviews of various acquisitions and proposed acquisitions.   •    Strategic Planning: Led Aetna through a period of strategic and regulatory transformation and domestic and international growth through strategic acquisitions and dispositions, culminating in the $78 billion acquisition of Aetna by CVS completed in 2018.   Career Highlights: •    Aetna Inc., a multi-national, Fortune 100 diversified healthcare benefits company ¡   Chairman (2011-2018) ¡   Chief Executive Officer (2010-2018) ¡   President (2007-2010) ¡   Other Executive Positions (2003-2007) •    Executive Positions at Cigna, NYLCare Health Plans and SelectCare, Inc.   Other Public Company Boards: CVS Health Corporation (2018-2020)						Key Skills and Experience: •    Leadership: Accomplished, consumer-focused executive with substantial global experience and a track record of delivering growth, driving operational improvements and launching successful product innovations over a 33-year career at 3 global iconic consumer product brand companies, including leading a global business for 6 years.   •    Consumer/B2B/Retail: Gained deep and valuable branding, distribution and operating experience with consumer wellness products on a global scale over a long career at 3 different multi-national organizations in the consumer goods industry (Procter & Gamble, Johnson & Johnson and S.C. Johnson & Sons). Continues to focus on the consumer/retailing sector through service on the Target board of directors and on a globally recognized consumer and B2B brand through service on the board of Hilton, which has over 5,000 properties in over 100 countries and territories.   •    Marketing: Brings a multi-cultural and multi-national perspective acquired from working 18 years internationally to corporate strategy with respect to brand building, new product and commercial innovation and the consumer experience, as well as experience with managing large and complex marketing budgets.   •    Strategic Planning: As Group President of North America at Procter & Gamble, oversaw multi-year strategic planning for the largest division of the company, with over $32 billion in annual sales, and reversed a decline in sales after assuming that role.   Career Highlights: •    The Procter & Gamble Company, a leading provider of branded consumer packaged goods ¡    Group President (2007-2015) ¡  Other Executive Positions (1990-2015) •    Johnson & Johnson (1986-1990) •    S.C. Johnson & Sons (1983-1986)   Other Public Company Boards: Hilton Worldwide Holdings Inc. (since 2017) PPG Industries, Inc. (since 2016) Target Corporation (since 2015)

 

4    Verizon 2021 Proxy Statement

Item 1: Election of Directors

Nominees for Election

 

 

Independent Director since: 2006   Age: 64   Committees: Audit Finance Human Resources						Independent Director since: 2018   Age: 63   Committees: Human Resources (Chair)
Key Skills and Experience: •    Leadership: Led Darden Restaurants, Inc., the largest company-owned and operated full-service restaurant company in the world, as CEO for 10 years, achieving sales growth of over 75% during the period.   •    Consumer/B2B/Retail: Brings deep and valuable insights into consumer services and retail operations gleaned from his experience leading a Fortune 500 company that owned well-known national consumer brands including Olive Garden, LongHorn Steakhouse, Red Lobster and Capital Grille. Further consumer and retail expertise through board position at VF Corporation, which owns well-known national brands including Timberland and North Face.   •    Financial Expertise: Gained substantial financial expertise through, among other roles, investment banking positions of increasing seniority over 12 years, the CFO role at Darden, serving as a Director of the Federal Reserve Bank of Atlanta and as trustee or director of mutual funds pursuing a wide array of investment strategies.   •    Risk Management: Acquired significant expertise with financial risk assessment and enterprise risk management during his career in investment banking and at Darden, as well as through his many years of service on the Federal Reserve Bank Board, the Audit Committees of VF Corporation and Verizon, the Investment & Capital Markets Committee of Travelers and as a Trustee for the MFS Mutual Fund complex.   Career Highlights: •    Darden Restaurants, Inc. ¡    Chairman (2005-2014) ¡  Chief Executive Officer (2004-2014) ¡    Other Executive Positions (1995-2014) •    Director of the Federal Reserve Bank of Atlanta (2010-2015) •    Investment banker and lawyer specializing in securities and finance   Other Public Company Boards: The Travelers Companies, Inc. (since 2017) VF Corporation (since 2004) MFS Mutual Funds (since 2017)						Key Skills and Experience: •    Leadership: Successful and dynamic leader in the fiercely competitive technology and e-commerce space with a proven track record of creating shareholder value through innovation and a focus on values at numerous companies, including Priceline, Virgin Mobile USA and PayPal, which has approximately 375 million active accounts across more than 200 markets.   •    Cybersecurity: Gained extensive cybersecurity and risk management experience as a director of Symantec Corporation, a global leader in cybersecurity, for nearly 20 years, including serving as the independent chairman for 6 years.   •    Strategic Planning: Spearheaded innovation and growth at start-ups and established companies, including Priceline, where he grew annual revenues from $20 million to nearly $1 billion over two years, Virgin Mobile USA, where he successfully built a pre-paid cellphone business, American Express, where he expanded global mobile and online payment services, and PayPal, where he has achieved significant revenue growth and stock price appreciation.   •    Technology: Acquired significant expertise in mobile technology and digital innovation over a long career spanning the telecommunications, financial technology and e-commerce industries.   Career Highlights: •    PayPal Holdings, Inc., a leading online payments company ¡  President and Chief Executive Officer (2015-present) ¡  President and CEO-Designee (2014-2015) •    Group President of the Enterprise Group at American Express Company (2010-2014) •    President of the Prepaid Group at Sprint Nextel Corporation (2009-2010) •    Founding CEO of Virgin Mobile USA, Inc. (2001-2009) •    President and CEO of Priceline Group, Inc. •    Various Executive Positions, including President of the Consumer Markets Division, at AT&T, Inc.   Other Public Company Boards: PayPal Holdings, Inc. (since 2015) Symantec Corporation (2000-2019) FLEX LTD. (2009-2018)

 

Verizon 2021 Proxy Statement    5

Item 1: Election of Directors

Nominees for Election

 

 

Independent Director since: 2010   Age: 66   Committees: Corporate Governance and Policy Human Resources						Director since: 2018   Age: 55
Key Skills and Experience: •    Leadership: Nationally recognized for innovative infrastructure development and forging strategic public and private partnerships. As U.S. Secretary of Transportation, oversaw national transportation policy, spearheaded several historic legislative measures, including record funding for surface transportation investment and aviation safety and security, promoted intermodal transportation systems and led effort to significantly expand high speed rail network.   •    Regulatory/Public Policy: Brings a strategic, collaborative and result-oriented approach to oversight of regulatory and public policy issues developed over his long and accomplished career in both the public and private sectors.   •    Risk Management: Globally recognized advisor for reputational risk management, corporate compliance and emergency preparedness, having served as an independent monitor/advisor for Toyota, Takata and Fiat Chrysler as these companies worked through safety issues, and coordinated the Federal Highway Administration’s response to several major natural disasters.   •    Strategic Planning: Implemented a visionary strategic plan for the U.S. Department of Transportation to expand its focus on safety, mobility and access, economic development and trade, the environment and national security. Developed an innovative financing and contracting program at the Federal Highway Administration that produced significant operational and cost efficiencies.   Career Highlights: •    Partner, Squire Patton Boggs LLP, a law firm (2001 to present) •    U.S. Secretary of Transportation (1997-2001) •    Administrator, Federal Highway Administration (1993-1997) •    Various policy positions with the State of Arkansas   Other Public Company Boards: Kansas City Southern (2001-2019) Transurban Group (2009-2018)						Key Skills and Experience: •    Leadership: Driving Verizon’s leadership position in the deployment of 5G technology and multi-access edge computing in the U.S. Built an industry-leading telecommunications software and services organization at Ericsson, one of the world’s largest telecommunications companies with operations in over 180 countries and network infrastructure providing over 40% of the globe’s mobile traffic in 2015. Member of the Board of the United Nations Foundation that actively works with the U.N.’s Sustainable Development Goals.   •    Strategic Planning: Implemented bold and innovative strategic changes, including Verizon 2.0, the transformation of Verizon’s operating model to a customer-focused business served by industry-leading networks, as well as Ericsson’s successful diversification into the software and services business from its traditional hardware-centric business.   •    Technology: Gained significant expertise in mobile technology and telecommunications network architecture as Verizon’s Chief Technology Officer and over his 25-year career at Ericsson.   •    Telecommunications: Brings to the Board extensive operational and strategic experience and a deep understanding of the challenges and opportunities presented in the evolving global telecommunications landscape, as well as in-depth knowledge of Verizon’s businesses.   Career Highlights: •    Verizon Communications Inc. ¡    Chairman (2019 to present) and Chief Executive Officer (2018 to present) ¡  Executive Vice President, President – Global Networks and Chief Technology Officer (2017-2018) •    Ericsson ¡    President and Chief Executive Officer (2010-2016) ¡   Chief Financial Officer (2007-2009) ¡    Other executive positions throughout the global operations   Other Public Company Boards: Hexagon AB (2017-2018)

 

6    Verizon 2021 Proxy Statement

Item 1: Election of Directors

Nominees for Election

 

 

Independent Director since: 2015   Age: 69   Committees: Audit (Chair) Finance
Key Skills and Experience: •    Leadership: Twice elected by fellow partners to serve as Chairman and CEO of Deloitte & Touche LLP’s audit and enterprise risk services practice in the U.S., overseeing all operations, regulatory interaction and quality control for all audit and risk consulting clients. Led the firm through significant change in the accounting industry resulting from the passage of the Sarbanes-Oxley Act.   •    Financial Expertise: Gained comprehensive public accounting experience at the highest level and substantial financial expertise over his 40 year career at Deloitte & Touche and as the lead audit partner for several of its largest clients, as well as through serving as a Trustee of the Goldman Sachs Trust.   •    Risk Management: Developed a deep understanding of vertical and horizontal risk exposures – within companies and across industries – through providing enterprise risk services. Also led Deloitte & Touche through assessments of its own audit risk exposures.   •    Strategic Planning: As a member of Deloitte’s Board of Directors and numerous management committees, helped shape strategic organizational priorities and relationships with regulators.   Career Highlights: •    Deloitte & Touche LLP, the accounting, auditing and risk advisory subsidiary of Deloitte LLP ¡    Chairman and Chief Executive Officer (2001-2005 and 2012-2014) ¡   Member, Deloitte LLP Board of Directors (2006-2012)   Other Public Company Boards: Goldman Sachs Trust (since 2015)

 

Verizon 2021 Proxy Statement    7

 

 

Our Approach to Governance

Board Composition and Structure. We believe that good governance starts with an independent, effective and diverse Board. Our Board is one of Verizon’s most critical strategic assets. As such, the composition of the Board evolves along with our strategic needs for the future. We believe we are more likely to achieve sustainable growth in shareholder value when our Board has the right mix of skills, expertise and tenure.

Diversity is one critical element of board composition that Verizon has focused on over the years in our refreshment and succession planning processes, as well as in our Board leadership structure. We believe that a board with a diverse set of viewpoints, backgrounds and expertise is best positioned to provide new perspectives to our management team as it assesses the challenges and opportunities impacting our business. In addition, a diverse board is more likely to consider a wider range of possibilities and help management achieve better outcomes.

The membership, structure, policies and practices of our Board and its committees promote the effective exercise of the Board’s role in the governance of Verizon. In addition, our Corporate Governance Guidelines provide a framework for the Board’s operations and address key governance practices. The Corporate Governance and Policy Committee monitors best practices and developments in corporate governance, considers the views of Verizon’s shareholders, and periodically recommends changes to the Board’s policies and practices, including the Guidelines.

Strategy and Risk Oversight. We recognize that our shareholders rely on our Directors to oversee Verizon’s core business strategy for realizing opportunities and mitigating risks. As management navigates a rapidly changing competitive landscape, it is the Board’s duty to oversee management’s execution of the Company’s strategic plan, addressing emerging challenges and disruptions, and promoting innovation. At the same time, Directors must satisfy themselves that the risk management policies and procedures designed and implemented by management are consistent with the Company’s strategy and risk appetite, that these policies and procedures are functioning as intended, and that necessary steps are taken to create a culture of risk-aware decision making throughout the organization. Through its oversight role, the Board sends a message to management that risk management is not an impediment to the conduct of business, but is instead an integral component of strategy, culture and business operations.

Shareholder Engagement. Our Board welcomes the opportunity to develop an understanding of shareholder perspectives on our Company and to foster long-term relationships with our shareholders. Our Directors understand that our investors want to hear from them on their thinking on a range of topics not just limited to the shareholder proposals we receive during proxy season. Verizon’s leadership team engages with shareholders throughout the year on Board and governance matters, ESG and executive compensation and reports back to the Board on the feedback they receive. These engagements include the participation of our independent Lead Director, Clarence Otis, Jr., or other Directors, when requested and appropriate. See “Our Approach to Shareholder Engagement” beginning on page 20 for more information.

 

Where to Find More Information on Governance at Verizon?
You can find information about Verizon’s Directors, Board committees and a video from our Lead Director on the Corporate Governance section of our website at www.verizon.com/about/investors/corporate-governance. You can also access Verizon’s Corporate Governance Guidelines, Code of Conduct and other corporate governance materials, including Verizon’s certificate of incorporation, bylaws, committee charters and policies at that site. You can request copies of these materials from the Assistant Corporate Secretary at the address given under “Contacting Us.”   In addition, you can access all of Verizon’s ESG reporting, including our ESG Report, TCFD Report, Transparency Reports and Political Engagement Reports, as well as key company policies, through our ESG Resources Hub at www.verizon.com/about/investors/reporting.

 

8    Verizon 2021 Proxy Statement

Our Board Composition and Structure

Our Board’s Independence

 

 

Our Board Composition and Structure

Our Board’s Independence

Verizon’s Corporate Governance Guidelines establish standards for evaluating Director independence and require that a substantial majority of the Directors be independent. The Board determines the independence of each Director under New York Stock Exchange (NYSE) and Nasdaq governance standards, as well as the more stringent standards included in the Guidelines. These standards identify the types of relationships that, if material, could impair independence, and fix monetary thresholds at which the relationships are considered to be material. The Guidelines are available on the Corporate Governance section of our website at www.verizon.com/about/investors/corporate-governance. The Corporate Governance and Policy Committee conducts an annual review of any relevant business relationships that each Director may have with Verizon and reports its findings to the full Board.

Based on the Committee’s recommendation, the Board has determined that all of the non-employee Director candidates meet the independence requirements of applicable law, the NYSE, Nasdaq and Verizon’s Corporate Governance Guidelines: Ms. Archambeau, Ms. Austin, Mr. Bertolini, Ms. Healey, Mr. Otis, Mr. Schulman, Mr. Slater and Mr. Weaver. The Board also determined that Mr. Vittorio Colao, who served as a Director until February 13, 2021, Ms. Kathryn Tesija, who served as a Director until May 7, 2020, and Ms. Carol Tomé, who served as a Director from January 1 to March 12, 2020, were independent.

Additionally, the Board has determined that each member of the Audit Committee and the Human Resources Committee meets the additional, heightened independence criteria applicable to such committee members under the applicable NYSE and Nasdaq rules. The Board made the same determination for Ms. Tesija, who served on the Audit Committee until May 7, 2020.

The employer of Mr. Schulman made payments to Verizon for telecommunications services during 2020. In addition, during 2020 Verizon made payments to Mr. Schulman’s employer for processing fees relating to payments to and from our customers in connection with Verizon services and wireless devices. Applying the independence standards above, the Board considered the foregoing payments and determined that these general business transactions and relationships are not material and did not impair the ability of the Director to act independently.

Aligning Director Skills and Experience to Our Strategy

Verizon’s strategy is to extend our network leadership through continued innovation, grow our core business and provide our customers with best-in-class experiences, while maintaining the balanced capital allocation approach and financial discipline that our investors expect of us. In light of the Company’s strategy and expected future business needs, the Board has identified the skills and experience in the table below as important to be represented on the Board as a whole.

 

		Skills and Experience
		•   Consumer/B2B/Retail		•   Marketing		•   Strategic Planning
		•   Cybersecurity		•   Regulatory/Public Policy		•   Technology
		•   Financial Expertise		•   Risk Management		•   Telecommunications

 

Verizon 2021 Proxy Statement    9

Our Board Composition and Structure

Our Board Leadership Structure

 

 

 

Our Board Leadership Structure

Verizon’s governance framework provides the Board with the flexibility to select the appropriate Board leadership structure for the Company. In making this leadership structure determination, the Board considers many factors, including the specific needs of the business and the long-term interests of our shareholders. We have historically combined the roles of Chairman and Chief Executive Officer, and our Board has been satisfied that a combined Chairman and CEO structure has served our shareowners well over time.

Given the dynamic and competitive environment in which Verizon operates, the Board believes that Verizon and our shareholders are best served by a Chairman who has broad and deep knowledge of our industry and the vision, energy and experience to position Verizon as the leader of transformational change in the communications ecosystem. Based on these considerations, the Board has determined that, at this time, our CEO, Hans Vestberg, is the Director best qualified to serve in the role of Chairman.

 

To maintain an appropriate level of independent checks and balances in its governance, and consistent with the Corporate Governance Guidelines, the independent members of the Board have elected an independent Lead Director who has the responsibilities described under “Role of the Lead Director.” Clarence Otis, Jr. currently serves as Lead Director. The Lead Director and our Chairman and CEO meet and speak with each other regularly about the Company’s strategy and operations and the functioning of the Board. In addition, any shareholder or interested party may communicate directly with the Lead Director.   All Directors play an active role in overseeing Verizon’s business at both the Board and committee level. Every Director is given the agenda for each Board and committee meeting in advance and can request changes. In addition, all Directors have unrestricted access to the Chairman and the senior leadership team at all times.   The Board believes that shareholders are best served by this current leadership structure because it features an independent Lead Director who provides independent and objective oversight and who can express the Board’s positions in a forthright manner, as well as independent Directors who are fully involved in the Board’s operations and decision making.						Role of the Lead Director   •   Promotes a strong Board culture, including encouraging and facilitating active participation of all Directors   •   Approves the agenda, schedule and materials for all Board meetings, in consultation with the Chairman   •   Is available to advise the committee chairs in fulfilling their designated responsibilities   •   Acts as principal liaison with the Chairman   •   Chairs executive sessions, including those held to evaluate the CEO’s performance and compensation   •   Chairs any meeting of the Board if the Chairman is not present   •   Calls Board meetings and executive sessions as needed   •   Leads the Board’s annual self-evaluation   •   Oversees the process for CEO succession planning   •   Acts as a primary point of contact for Board communication with major shareholders and other key stakeholders, as appropriate

Limiting Service on Other Boards

Based on the evolving role of directors and the need to devote sufficient time to fulfill their responsibilities effectively, the Board has adopted a policy that a Director who is an executive officer of a public company should serve on no more than two public company boards, and other Directors should serve on no more than four public company boards.

 

10    Verizon 2021 Proxy Statement

Our Board Composition and Structure

Board Meetings and Executive Sessions

 

 

Board Meetings and Executive Sessions

In 2020, our Board of Directors held 21 meetings, including 6 regularly scheduled meetings and 15 special meetings. Our Board reacted swiftly to the rapidly evolving landscape of the COVID-19 crisis and met in virtual-only format beginning in March 2020. The Board met more frequently in response to the crisis, resulting in a greater number of special meetings than in a typical year. In addition, a number of previously scheduled all-day meetings were converted into shorter sessions and held over a longer period of time to increase the number and frequency of updates the Board received on the Company’s response to the crisis and to enhance the meetings’ effectiveness and make them more conducive to the virtual format.

No incumbent Director attended fewer than 75% of the total number of meetings of our Board and the committees to which the Director was assigned in 2020, except that Ms. Austin, who was elected to the Board in October 2020 and is not yet assigned to a committee, attended two of the three Board meetings held during the period for which she was a Director in 2020. Directors standing for re-election are expected to attend the annual meeting of shareholders. In 2020, all nine Directors standing for re-election attended the annual meeting, which was conducted in a virtual-only format.

The Corporate Governance Guidelines require the independent Directors to meet in executive session without any members of management present at least twice a year to review and evaluate the performance of the Board and to evaluate the performance and approve the compensation of the CEO. In practice, our Board typically meets in executive session during each regular Board meeting.

Board Committees

Our Board of Directors has established four standing committees: the Audit Committee, the Corporate Governance and Policy Committee, the Finance Committee, and the Human Resources Committee. Each committee has a written charter that defines its specific responsibilities. The chair of each committee approves the agenda and materials for each meeting. Each committee has the authority to retain independent advisors to assist it in carrying out its responsibilities.

Our committee meetings are not held concurrently, which enables our Directors to sit on multiple committees. Our newly appointed Directors also attend all committee meetings for a period prior to being appointed to any particular committee, which allows them to understand the inner workings of all committees.

 

Verizon 2021 Proxy Statement    11

Our Board Composition and Structure

Board Committees

 

 

 

		Members*   Gregory Weaver (Chair)       Shellye Archambeau   Clarence Otis, Jr.   * Kathryn Tesija served on the Committee until May 7, 2020.       Meetings in 2020: 11				Audit Committee   Key Responsibilities   •   Assess and discuss with management Verizon’s significant business risk exposures (including those related to cybersecurity, data privacy, data security and bribery and corruption) and oversee management’s programs and policies to monitor, assess and manage such exposures   •   Assess Verizon’s overall control environment, including controls related to financial reporting, disclosure, compliance and significant financial and business risks   •   Appoint, approve fees for, and oversee the work of the independent registered public accounting firm   •   Oversee financial reporting and disclosure matters   •   Oversee Verizon’s internal audit function   •   Assess Verizon’s compliance processes and programs   •   Review the Chief Compliance Officer’s annual report regarding anti-corruption compliance, compliance with significant regulatory obligations, export controls, and data protection   •   Assess policies and procedures for executive officer expense accounts and perquisites, including the use of corporate assets   •   Assess procedures for handling complaints relating to accounting, internal accounting controls or auditing matters   The Board has determined that each of Ms. Archambeau, Mr. Otis and Mr. Weaver is an audit committee financial expert.   The Audit Committee Report is included on page 59.

 

		Members*   Shellye Archambeau (Chair)     Melanie Healey   Rodney Slater   * Vittorio Colao served on the Committee until February 13, 2021. Kathryn Tesija served on the Committee until May 7, 2020.       Meetings in 2020: 7				Corporate Governance and Policy Committee   Key Responsibilities   •   Evaluate the structure and practices of our Board and its committees, including size, composition, independence and operations   •   Recommend changes to our Board’s policies or practices or the Corporate Governance Guidelines   •   Identify and evaluate the qualifications of Director candidates   •   Recommend Directors to serve as members of each committee and as committee chairs   •   Review potential related person transactions   •   Facilitate the annual assessment of the performance of the Board and its committees   •   Oversee ESG commitments, reporting and engagement   •   Oversee Verizon’s position and engagement on important public policy issues, including those relating to political contributions, lobbying activities, and human rights, that may affect our business and reputation   •   Review the activities of Verizon’s community and social impact initiatives, including philanthropic activities

 

12    Verizon 2021 Proxy Statement

Our Board Composition and Structure

Board Committees

 

 

		Members*   Mark Bertolini (Chair)       Clarence Otis, Jr.   Gregory Weaver   * Vittorio Colao served on the Committee until February 13, 2021.       Meetings in 2020: 7				Finance Committee   Key Responsibilities   •   Monitor Verizon’s capital needs and financing arrangements and ability to access the capital markets   •   Monitor expenditures under the annual capital plan approved by our Board   •   Review Verizon’s policies and strategies for managing currency, interest rate, renewable energy and counterparty exposures   •   Review and approve Verizon’s derivatives policy and monitor the use of derivatives, including our renewable power purchase agreement strategy   •   Review Verizon’s insurance and self-insurance programs   •   Oversee the investment of pension assets and the funding of pension and other postretirement benefit obligations

 

		Members   Daniel Schulman (Chair)       Mark Bertolini   Melanie Healey   Clarence Otis, Jr.   Rodney Slater       Meetings in 2020: 5				Human Resources Committee   Key Responsibilities   •   Oversee the development of Verizon’s executive compensation program and policies   •   Approve corporate goals relevant to the CEO’s compensation   •   Evaluate the CEO’s performance and recommend his compensation to the Board   •   Review and approve compensation and benefits for selected senior managers   •   Consult with the CEO on talent development   •   Oversee succession planning and assignments to key leadership positions   •   Review and make determinations under Verizon’s clawback policies   •   Review the impact of Verizon’s executive compensation policies and practices, and the performance metrics underlying the compensation program, on Verizon’s risk profile   •   Review and recommend non-employee Director compensation   The Compensation Committee Report is included on page 43.

 

Verizon 2021 Proxy Statement    13

Our Board Composition and Structure

Our Approach to Board and Committee Assessments

 

 

Our Approach to Board and Committee Assessments

Our Board conducts a comprehensive annual assessment to enhance the effectiveness of the Board and its committees and to continue to reflect evolving best practices in their processes. While the assessment process is generally led by the Lead Director, the Board periodically engages a third-party consulting firm to bring an outside perspective to the process. As part of this robust assessment, each Director completes a detailed written questionnaire designed to elicit suggestions for improving Board and committee effectiveness and feedback on a range of issues, including Board leadership, culture, purpose and strategy, composition and structure and risk management. In addition, the Lead Director or the third-party consulting firm conducts individual interviews with each of the independent Directors to discuss these topics, among others. The Board discusses the feedback received from the questionnaires and interviews during an evaluation session facilitated by the Lead Director. The evaluation for 2020 was conducted by the Lead Director and concluded that the Board and its committees are operating effectively. The recommendations to further enhance Board effectiveness, which we addressed, include continued focus on Board refreshment and continuing to balance the time used for presentations with the time permitted for discussion.

In addition to annual assessments, the Board evaluates and modifies its oversight of Verizon’s operations on an ongoing basis. During their executive sessions, the independent Directors consider agenda topics that they believe deserve additional focus and raise new topics to be addressed in future meetings.

The Corporate Governance and Policy Committee annually appraises the framework for our Board and committee assessment processes.

 

Board and Committee Assessment Process

Feedback Solicited       Online questionnaire on a range of topics relating to enhancing Board effectiveness

One-On-One Discussions     Candid, one-on-one discussions between the Lead Director and Directors to elicit additional feedback

Reporting Back   A summary of the assessment results provided to the Board

Closed Session Discussion   Closed session discussion of the assessment results facilitated by the Lead Director

Feedback Incorporated   Policies and practices updated as appropriate to address any suggestions or enhancements per the assessment

Our Approach to Director Orientation and Continuing Education

We provide our Directors with comprehensive orientation and education programs to promote a deep understanding of issues affecting our business and industry, help Directors stay current and knowledgeable about the Company’s business and its competitive and technology landscape, and support Directors in performing their oversight duties.

New Director Orientation. When a new Director joins the Board, we conduct an orientation program that includes, among other things, a review of the Company’s purpose, business strategy and operations, technology, financial condition, legal and regulatory framework and other relevant topics.

Director Continuing Education. We support current Directors in their ongoing learning by providing continuing education opportunities and programs. These programs include presentations by thought leaders and industry experts, formal education sessions, meetings with management subject matter experts, participation in industry forums and site visits.

 

14    Verizon 2021 Proxy Statement

Our Approach to Strategy and Risk Oversight

Oversight of Strategy

 

 

Beyond the Boardroom   Engagement outside of Board meetings provides our Directors with additional insight into our business and our industry, and gives them valuable perspectives on the performance of our Company, the Board, our CEO and other members of senior management, and on the Company’s strategic direction.

 

		Our individual Directors have discussions with each other and with our CEO, and have informal individual and small group meetings with high potential members of our senior management team in order to gain insight into the Company’s management development program and succession pipeline.
		Our committee chairs and Lead Director meet and speak regularly with each other and with members of our management in connection with planning for meetings. All Directors are encouraged to provide suggestions for meeting agendas and materials.
		Our Directors regularly attend “deep dives” on current topics of interest and technology training as part of their ongoing Director education program.
		Our Directors receive weekly updates on recent developments, press coverage and current events that relate to our business, as well as monthly business operation reviews and analyst reports.
		In 2020, several of our Directors appeared on Company webcasts to discuss leadership, the COVID-19 crisis and racial justice matters with employees across the Company.

Our Approach to Strategy and Risk Oversight

Oversight of Strategy

All of our Directors have deep experience and expertise in strategic planning and execution. The Board engages Verizon’s senior leaders in robust discussions about strategic goals and challenges them to execute on the strategic plan, address emerging challenges and disruptions, and promote innovation. In addition to an annual strategy retreat, strategy is allocated substantial time on the agenda for each regular Board meeting. During these reviews, the Board engages with senior management regarding the competitive landscape, operational objectives and challenges and regulatory developments.

 

Verizon 2021 Proxy Statement    15

Our Approach to Strategy and Risk Oversight

Oversight of Business Risks

 

 

Oversight of Business Risks

While senior management has primary responsibility for managing business risks, our Board of Directors is responsible for risk oversight. The Board works with senior management to develop a comprehensive view of Verizon’s key short- and long-term business risks. Verizon has a formalized business risk management reporting process that is designed to provide visibility to the Board about critical risks and risk mitigation strategies.

 

The Board of Directors oversees the management of risks inherent in the operation of Verizon’s businesses and the implementation of its strategic plan by using several different levels of review. The Board addresses the primary risks associated with Verizon’s business units and corporate functions in its operations reviews of those units and functions. Further, the Board reviews the risks associated with Verizon’s strategic plan throughout the year.   In addition, each of our Board committees oversees the management of risks that fall within that committee’s areas of responsibility. In performing this function, each committee has full access to management and may engage advisors.   Enterprise Risk Management Program. The Audit Committee oversees the operations of Verizon’s enterprise risk management program, which identifies the primary risks to Verizon’s business, including risks related to cybersecurity, data privacy and data security. The Audit Committee periodically monitors and evaluates the primary risks associated with particular business units and functions. As part of Verizon’s annual enterprise risk assessment process, the Audit Committee reviews key business risks with the Executive Vice President and Chief Financial Officer and the Senior Vice President of Internal Audit. These risks inform Board and Audit Committee discussion topics throughout the year.						Oversight of COVID-19 Crisis   As COVID-19 spread throughout the world in the first quarter of 2020, a significant portion of the U.S. became subject to restrictions on physical movement and limitations on business and other activities. In response to the crisis, Verizon began executing our business continuity plans and evolving our operations to protect the safety of our employees and customers and to continue to provide critical infrastructure and connectivity to our customers as they changed their ways of working and living. These restrictions and our responses to them significantly impacted how our customers use our products and services, how they interact with us, and how our employees work and provide services to our customers.   The Board navigated the COVID-19 crisis by holding additional meetings with management focused on the impact of the pandemic on our employees and our business, as well the broad-ranging components of our response. The Board oversaw the Company’s decision making relating to health, safety, and human capital management, as well as changes to the Company’s business approach, messaging and long-term strategy. The Board also participated in additional strategy sessions relating to the pandemic and received periodic updates from management throughout the year.

In addition, the Audit Committee works with Verizon’s Senior Vice President of Internal Audit, who helps identify, evaluate and implement risk management controls and methodologies to address identified risks and who functionally reports directly to the Committee. The Committee routinely meets with representatives from the independent registered public accounting firm, the Senior Vice President of Internal Audit, and the Executive Vice President and Chief Administrative, Legal and Public Policy Officer.

Strategic Crisis Management. In order to position Verizon leadership and the Board to respond to strategic risks and protect Verizon’s core assets in a potential crisis, the Company maintains a Strategic Crisis Management Program. The Program defines clear roles and responsibilities in dealing with various potential crises and outlines a process to make decisions and implement appropriate actions on a timely basis. Through the Program, the Verizon Strategic Crisis Leadership Team is positioned to assume executive ownership of strategic crisis events through drills and scenario-based training. The Program also includes employee crisis awareness training in order to encourage employees across the Company to quickly identify and report circumstances or events that could develop into a strategic crisis so that our leadership team can take

 

16    Verizon 2021 Proxy Statement

Our Approach to Strategy and Risk Oversight

Oversight of Environmental, Social and Governance Strategy and Risks

 

 

appropriate steps in response. In addition, Verizon’s Board maintains a Board Crisis Response Plan, which is a structured plan to be used in connection with any crisis that could have a significant strategic impact on the Company’s brand, reputation, finances or legal, political or regulatory position – providing a framework for appropriate Board oversight and assessment of the response to a crisis, while allowing the necessary flexibility to address the different types of crises that might arise.

Financial Risk and Capital Allocation. The Finance Committee assists our Board in its oversight of financial risk management. In performing this function, the Finance Committee monitors Verizon’s capital needs and financing plans and oversees the strategy for managing risk related to currency, interest rate and renewable energy exposures. The Finance Committee reviews and approves the Company’s derivatives policy and monitors the use of derivatives. The Finance Committee also reviews Verizon’s pension and other postretirement benefit obligations, as well as its insurance and self-insurance programs.

Oversight of Environmental, Social and Governance Strategy and Risks

Our Board recognizes that operating responsibly – minimizing the environmental impact of our operations, protecting the privacy of our customers’ information and respecting human rights by creating an environment of respect, integrity and fairness for our employees and customers wherever we do business – is fundamental to the long-term success of our Company. The Corporate Governance and Policy Committee oversees corporate responsibility and sustainability. Verizon has a Chief ESG Officer dedicated to enhancing the Company’s sustainability reporting and stakeholder engagement on environmental, social and governance issues that align with Verizon’s core business strategy. The Chief ESG Officer heads a cross-functional team that focuses on strategic areas including governance, reporting, human rights, environmental sustainability and digital trust and safety and also oversees Verizon’s efforts to deliver on its ESG commitments. The Chief ESG Officer regularly provides the Corporate Governance and Policy Committee with updates on the Company’s ESG priorities, commitments and reporting.

Environmental Sustainability and Climate. To address climate-related risks, Verizon is taking steps to make our networks more climate resilient, minimize our environmental footprint, and develop solutions that enable our customers to minimize their environmental footprints. We are supporting the transition to a greener grid by making substantial investments in renewable energy. The Company has set ambitious goals to source or generate renewable energy equivalent to 50% of our total annual electricity consumption by 2025 and to be carbon neutral in our operations (Scope 1 and 2) by 2035. Each committee of the Board oversees the management of the specific risks related to our environmental sustainability strategy and the transition to a low carbon economy that fall under the committee’s area of responsibility:

 

•

Audit Committee: Environmental and climate-related risks discussed during annual business risk reviews with the Audit Committee include operational and financial risks relating to energy management and our renewable energy and carbon neutral commitments, maintaining network reliability during catastrophic and weather-related events, and possible laws or regulations that seek to mitigate climate change.

 

•

Corporate Governance and Policy Committee: At least annually the Chief ESG Officer briefs the Corporate Governance and Policy Committee on Verizon’s progress on meeting our environmental sustainability commitments.

 

•

Finance Committee: The Finance Committee oversees the strategy for managing risks related to Verizon’s renewable energy exposure through renewable energy purchase agreements, as well as the Company’s green financing strategy.

 

•

Human Resources Committee: To motivate management to be good stewards of our planet and reduce the environmental impact of our operations, the Human Resources Committee has included a carbon intensity reduction target as one of the performance measures in the Short-Term Incentive Plan (Short-Term Plan) since 2014.

 

Verizon 2021 Proxy Statement    17

Our Approach to Strategy and Risk Oversight

Oversight of Environmental, Social and Governance Strategy and Risks

 

 

Data Privacy and Cybersecurity. Protecting the privacy of our customers’ information and the security of our systems and networks has long been and will continue to be a priority at Verizon. The Board is committed to maintaining strong and meaningful privacy and security protections for our customers’ information. The Audit Committee has primary responsibility for overseeing Verizon’s risk management program relating to data privacy and security and cybersecurity. The Audit Committee also monitors Verizon’s compliance in the areas of data and privacy protection.

 

•

Data Privacy and Security. Verizon has technical, administrative and physical safeguards in place to help protect against unauthorized access to, use or disclosure of customer information and data we collect and store. Verizon has a dedicated Chief Privacy Officer whose team advises the business on privacy risks and assesses the effectiveness of privacy controls. The Chief Privacy Officer annually briefs the Audit Committee on data privacy risks and mitigating actions.

 

•

Cybersecurity. To more effectively address the cybersecurity threats posed today, Verizon has a dedicated Chief Information Security Officer whose team is responsible for leading enterprise-wide information security strategy, policy, standards, architecture and processes. Verizon’s comprehensive information security program includes, among other aspects, vulnerability management, antivirus and malware protection, file integrity monitoring, encryption and access control. The Chief Information Security Officer leads an annual review and discussion with the full Board dedicated to Verizon’s cyber risks and threats and cyber protections and provides updates throughout the year, as warranted.

Responsible Business. Verizon’s Responsible Business Council, chaired by the CEO and composed of members of the senior leadership team, oversees the integration of responsible practices as a core operating principle. At least annually, the Chief Corporate Social Responsibility Officer reports to the Board on the Council’s activities and Verizon’s community and social impact initiatives. In 2020, Verizon launched Citizen Verizon, our responsible business plan for economic, social and environmental advancement, which focuses on three pillars: digital inclusion, climate protection and human prosperity.

Current Policy Issues and Corporate Reputation. Companies in our industry and beyond are facing challenges that have impacted their reputations and brought adverse attention and action by consumers, regulators, and shareholders. The Corporate Governance and Policy Committee has primary responsibility for overseeing the Company’s handling of business and reputational risks relating to Verizon’s position and engagement on important public policy issues, as well as individual events and incidents that may affect the Company’s reputation. Each year, Verizon’s Executive Vice President and Chief Administrative, Legal and Public Policy Officer updates the Committee on the current policy issues facing the Company that may generate publicity and impact corporate reputation. Through this annual briefing, the Committee reviews and discusses with management the most pressing known reputational issues and the Company’s position on each issue, as well as the processes in place to anticipate potential developments in each of the identified areas and to quickly respond to any such developments in a timely manner. Outside the regular meeting cycle, management makes sure that the Board is informed of current developments that may pose reputational risks to the industry or the Company.

Political Activities and Lobbying. Verizon adheres to the highest ethical standards when engaging in any political activity. Our political activity, including lobbying, is overseen by the Corporate Governance and Policy Committee, which receives a comprehensive briefing on these activities at least annually. Moreover, Verizon’s political activity is subject to robust internal controls. The Code of Conduct requires that all lobbying activities on behalf of Verizon be authorized by public policy or legal personnel. Corporate policy and training materials provide guidance to employees regarding legal requirements in connection with lobbying activities.

Verizon understands that transparency regarding our political activity is critical to maintaining the trust of our stakeholders. We publish a political engagement report on our corporate website that is updated twice a year that lists all political action committee contributions and corporate political contributions. Our report also discloses our Public Policy organization’s memberships in trade associations and issue advocacy organizations for which our support exceeds $50,000 annually. Verizon supports these organizations for a number of reasons, including to reflect our interest in the community, to acquire valuable industry and market expertise, and to support specific strategic policy and business goals and interests. These groups often have a diversity of members, interests and viewpoints that do not necessarily reflect Verizon’s beliefs or

 

18    Verizon 2021 Proxy Statement

Our Approach to Strategy and Risk Oversight

Oversight of Human Capital Management

 

priorities and we may not always agree with all of the positions of each organization or its members. When we disagree with a position of an organization we support, we communicate our concerns through the senior executives who interact with these organizations. Verizon also takes these differences under consideration when determining whether support of an organization is, on balance, in the best interests of the Company and its stakeholders.

Human Rights. As expressed in its Human Rights Statement, Verizon is committed to operating with respect for internationally recognized human rights. We have a dedicated Business and Human Rights Program that works to embed human rights considerations into responsible business decision-making processes across the Company. Our human rights efforts are overseen by the Corporate Governance and Policy Committee.

Anti-Corruption. Verizon has a robust anticorruption program to comply with applicable anticorruption rules, including the Foreign Corrupt Practices Act and the U.K. Bribery Act. As part of this program, the Audit Committee receives annual reports summarizing the Company’s continued compliance with applicable anticorruption rules. Every two years, we review and assess our anti-corruption program with the goal of finding areas for improvement. This process is done under the direction of our Chief Compliance Officer, who reports the findings to the Audit Committee.

Oversight of Human Capital Management

Culture and Employee Engagement. Our Board views our employees as one of Verizon’s most critical assets and regularly receives briefings from the CEO on initiatives to strengthen our company culture and encourage employee engagement. The CEO reviews with the Board the results of the “Pulse” surveys completed by employees across the company. Periodically, our Directors attend employee town halls, participate in leadership forums with employees and, in 2020, several of our Directors appeared on Company webcasts to discuss leadership, the COVID-19 crisis and racial justice matters with employees across the Company.

Diversity and Inclusion. Verizon is committed to creating a collaborative, inclusive and diverse environment – within Verizon, with our customers and among our business partners and suppliers. The Board views this commitment as a business imperative and a competitive advantage. To promote diversity in our workforce and encourage the contribution of diverse business partners to our success, the Human Resources Committee has included diversity targets as performance measures in the Short-Term Plan for over 20 years. The Executive Vice President and Chief Human Resources Officer reviews diversity representation and initiatives with the Committee at least annually.

Succession Planning and Talent Development. Our Board recognizes that one of its most important duties is to promote continuity in Verizon’s senior leadership by overseeing the development of executive talent and planning for the efficient succession of the CEO. Our Board has delegated primary oversight responsibility for succession planning to the Human Resources Committee, which oversees assignments to key leadership positions. The Human Resources Committee reports on its activities to the full Board, which addresses succession planning during executive sessions that typically occur in connection with each regularly scheduled meeting.

To align the succession planning and management development process with Verizon’s strategic objectives, the Board and Human Resources Committee regularly consult with the CEO on Verizon’s organizational needs and competitive challenges, the potential of key managers, and plans for future developments and emergency situations. As part of this process, the Board and the Human Resources Committee also seek input from the Executive Vice President and Chief Human Resources Officer, as well as advice on related compensation issues from the Human Resources Committee’s independent compensation consultant.

Our Board generally conducts an in-depth review of senior leader development and succession planning at least once a year. Led by the CEO and the Executive Vice President and Chief Human Resources Officer, this review addresses Verizon’s management development initiatives, assesses senior management resources, and identifies individuals who should be considered as potential future senior executives.

 

Verizon 2021 Proxy Statement    19

Our Approach to Strategy and Risk Oversight

Other Risk-Related Matters

 

 

Our goal is to develop well-rounded, experienced and diverse senior leaders. High potential executives are challenged regularly with additional responsibilities, new positions or promotions to expose them to our diverse operations. These individuals are often positioned to interact more frequently with the Board, both in full Board meetings and in less formal settings and small groups, so the Directors can get to know and assess them.

Compensation Risk. The Human Resources Committee considers the impact of our executive compensation program and the incentives created by compensation awards on Verizon’s overall risk profile. It also oversees management’s annual assessment of compensation risk arising from Verizon’s compensation policies and practices. This annual assessment is conducted by members of management including the Senior Vice President of Internal Audit and the Corporate Secretary. The assessment includes a review of the features and characteristics of Verizon’s compensation policies and programs, the performance metrics under the Short- and Long-Term Incentive Plans and the process for calculating and approving adjustments that are part of the plan, as well as the approval processes for compensation programs and related payouts. The assessment also reviews governance oversight at the Committee and Board level, Code of Conduct provisions and mandatory training programs that reinforce policies that mitigate risk, and performance metrics and measurement periods that are aligned with Verizon’s business strategy.

Based on management’s review, Verizon has concluded that our compensation policies and procedures are not reasonably likely to have a material adverse effect on Verizon because they are appropriately structured and discourage employees from taking excessive risks.

Other Risk-Related Matters

Business Conduct and Ethics. We are committed to operating with the highest level of integrity, responsibility and accountability. To that end, we have adopted a Code of Conduct that applies to all employees, including the CEO, the Chief Financial Officer and the Controller. The Code of Conduct describes each employee’s responsibility to conduct business with the highest ethical standards and provides guidance about preventing, reporting and remediating potential compliance violations in key areas. Verizon thoroughly investigates all claims of misconduct. Various types of cases are reported to the Chief Compliance Officer, who discusses the most serious Code violations with the Audit Committee at least annually.

Directors are expected to act in the spirit of the Code of Conduct, and to comply with the specific ethical provisions of the Corporate Governance Guidelines. Our Board is strongly predisposed not to waive any of these business conduct and ethics provisions for executive officers or Directors. In the unlikely event of a waiver, we will promptly disclose the Board’s action on our website.

Related Person Transactions. The Board has adopted the Related Person Transaction Policy that is included in the Guidelines. The Corporate Governance and Policy Committee reviews transactions between Verizon and any of our Directors or executive officers or members of their immediate families to determine if any participants have a material interest in the transaction. If the Committee determines that a material interest exists, based on the facts and circumstances of each case, the Committee may approve, disapprove, ratify or cancel the transaction or recommend another course of action. Any Committee members who are involved in a transaction under review do not participate in the Committee’s deliberations. During 2020, there were no related person transactions required to be disclosed in this proxy statement.

Our Approach to Shareholder Engagement

We believe that a robust shareholder outreach program is an essential component of maintaining our strong corporate governance practices. Ongoing communication with our investors helps our Board and senior management gather useful feedback on a wide range of topics. In our discussions with investors, we seek their input on a variety of corporate governance, compensation and ESG topics that may impact our business or reputation. We strive for a collaborative approach with investors to solicit and understand a variety of perspectives. These engagements include the participation of our independent Lead Director, Clarence Otis, Jr., or other Directors, when requested and appropriate. Shareholder feedback is regularly summarized and shared with our Board.

 

20    Verizon 2021 Proxy Statement

Our Approach to Shareholder Engagement

Special Meeting Threshold

 

In 2020, we took a proactive approach and repeatedly engaged with our top 100 investors in email blasts and one-on-one discussions about matters including the Company’s:

 

 

In addition to our regular shareholder engagement, in 2020, management retained a third-party consultant to survey approximately 80 of Verizon’s equity and fixed income investors to obtain feedback on the effectiveness of our communications and engagements with them and reviewed the survey results with the Board.

Special Meeting Threshold

At the 2020 Annual Meeting, shareholders approved an advisory proposal seeking to lower the threshold for the shareholder right to call a special meeting. The then-existing right to call a special meeting allowed any individual shareholder owning at least 10%, or shareholders holding in the aggregate at least 25% of Verizon’s stock, to call a special meeting. The proposal requested a 10% threshold for a shareholder group. In response to the shareholder vote, the Board of Directors asked management to conduct an outreach campaign to solicit shareholders’ input on the threshold percentage that should be required to call special meetings.

During our campaign, we spoke with nine of our largest shareholders, representing approximately 22% of our outstanding shares as of September 30, 2020. This group of shareholders included shareholders who voted both for and against the proposal. Several of these shareholders expressed the view that the existing 25% threshold was appropriate but understood the Board’s desire to respond to the vote, and indicated that they would be supportive of a lower threshold that takes into account consideration of Verizon’s particular facts and circumstances. However, several shareholders expressed concern that a 10% threshold was too low given the composition of Verizon’s shareholder base, and stated that a 15% threshold would be preferable. One shareholder group stated that from their perspective, a 10% threshold is optimal but agreed they would consider being supportive of a 15% threshold.

The Board gave careful consideration to the views expressed by our shareholders during outreach and concluded that lowering the threshold to 15% represented the optimal balancing of interests and considerations. In making its determination, the Board also considered the slim margin by which the proposal passed, and the significant shareholder support of the existing 25% threshold both at the 2020 Annual Meeting, and in previous years when a majority of shareholders supported it. On December 3, 2020, the Board amended the bylaws to permit shareholders holding in the aggregate at least 15% of the Company’s outstanding shares to call special meetings.

 

Verizon 2021 Proxy Statement    21

Our Approach to Shareholder Engagement

Communicating with Our Directors

 

Communicating with Our Directors

Our Board of Directors believes that communication with shareholders and other interested parties is an important part of the governance process, and has adopted the following procedure to facilitate this communication.

 

 

22    Verizon 2021 Proxy Statement

 

Non-Employee Director Compensation

The Human Resources Committee, in consultation with its independent compensation consultant, reviews and recommends non-employee Director compensation. In 2020, each non-employee Director of Verizon was entitled to an annual cash payment of $125,000. The Chairs of the Corporate Governance and Policy Committee and the Finance Committee were entitled to receive an additional annual cash payment of $20,000, and the Chairs of the Audit Committee and the Human Resources Committee were entitled to receive an additional annual cash payment of $30,000. The Lead Director was entitled to an additional annual cash payment of $50,000. Directors who served in each of these roles for less than a full year received a portion of the annual payment commensurate with their service.

In 2020, each non-employee Director also received a grant of Verizon share equivalents valued at $175,000 on the grant date. No meeting fees were paid if a non-employee Director attended a Board or committee meeting on the day before or the day of a regularly scheduled Board meeting. Each non-employee Director who attended a Board or committee meeting held on any other date received a meeting fee of $2,000. In 2020, the Board met more frequently than in a typical year in response to the rapidly evolving landscape of the COVID-19 crisis, resulting in a greater number of Board meetings.

Each non-employee Director who joins our Board receives a one-time grant of 3,000 Verizon share equivalents valued at the closing price on the date the new Director joins our Board.

All share equivalents that non-employee Directors receive are automatically credited to the Director’s deferred compensation account under the Verizon Executive Deferral Plan, which is referred to as the Deferral Plan, and invested in a hypothetical Verizon stock fund. Amounts in a Director’s deferred compensation account are paid in a cash lump sum in the year following the year the Director leaves our Board.

Non-employee Directors may choose to defer all or part of their annual cash payment and meeting fees (if any) under the Deferral Plan. They may elect to invest these amounts in the hypothetical investment options available to participants in Verizon’s Management Savings Plan or in a hypothetical cash account that earns a return rate equal to the long-term, high-grade corporate bond yield average as published by Moody’s Investor Services.

The non-employee Directors are eligible to participate in the Verizon Foundation Matching Gifts Program. Under this program, which is open to all Verizon employees, the Foundation matches up to $5,000 per year of charitable contributions to accredited colleges and universities, $1,000 per year of charitable contributions to any non-profit with 501(c)(3) status, and $1,000 per year of charitable donations to designated disaster relief campaigns.

 

Verizon 2021 Proxy Statement    23

Non-Employee Director Compensation

Non-Employee Director Compensation in 2020

 

Non-Employee Director Compensation in 2020

 

Name (a)		Fees Earned or Paid in Cash1 ($) (b)				Stock Awards2 ($) (c)				Option Awards ($) (d)				Non-Equity Incentive Plan Compensation ($) (e)				Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) (f)				All Other Compensation3 ($) (g)				Total ($) (h)
Shellye Archambeau*			181,000				175,000				0				0				0				0				356,000
Roxanne Austin			35,250				221,470				0				0				0				0				256,720
Mark Bertolini*			179,000				175,000				0				0				0				0				354,000
Vittorio Colao+			159,000				175,000				0				0				0				0				334,000
Melanie Healey			153,000				175,000				0				0				0				1,000				329,000
Clarence Otis, Jr.**			219,000				175,000				0				0				0				0				394,000
Daniel Schulman*			181,000				175,000				0				0				0				0				356,000
Rodney Slater			153,000				175,000				0				0				0				0				328,000
Kathryn Tesija+			45,667				175,000				0				0				0				0				220,667
Carol Tomé+			37,250				358,150				0				0				0				0				395,400
Gregory Weaver*			199,000				175,000				0				0				0				0				374,000

 

*	Denotes a chair of a standing committee during 2020.

**	Mr. Otis served as Lead Director during 2020.

+	Mr. Colao served on the Board until February 13, 2021. Ms. Tesija served on the Board until May 7, 2020. Ms. Tomé served on the Board from January 1 to March 12, 2020.

1	This column includes all fees earned in 2020, whether the fee was paid in 2020 or deferred.

2

For each non-employee Director, this column reflects the grant date fair value of the non-employee Director’s 2020 annual stock award and, for Mses. Austin and Tomé, the one-time grants they received when joining the Board, in each case computed in accordance with FASB ASC Topic 718. The following reflects the aggregate number of share equivalent awards outstanding as of December 31, 2020 for each person who served as a non-employee Director during 2020: Ms. Archambeau, 31,015; Ms. Austin, 3,779; Mr. Bertolini, 25,805; Mr. Colao, 8,533; Ms. Healey, 41,628; Mr. Otis, 88,148; Mr. Schulman, 10,973; Mr. Slater, 54,116; Ms. Tesija, 35,659; Ms. Tomé, 6,284; and Mr. Weaver, 23,417.

3	This column reflects matching contributions made on the non-employee Directors’ behalf under the Verizon Foundation Matching Gift Program.

 

24    Verizon 2021 Proxy Statement

Executive

Compensation

Item 2: Advisory Vote to Approve Executive Compensation

Shareholders have strongly supported Verizon’s executive compensation program since our first annual advisory vote on the matter in 2009. We are asking you to vote in favor of the following non-binding resolution:

“Resolved, that the shareholders approve, on an advisory basis, the compensation of the named executive officers, as disclosed in Verizon’s proxy statement for the 2021 Annual Meeting of Shareholders pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the Compensation Tables and the related narrative discussion.”

The structure of our executive compensation program for 2020 is similar to prior years, with updates to address changes in our business unit structure and strategic emphasis. Our Board recommends a vote FOR this resolution because the Board believes our program effectively:

 

•

Encourages strong short-term and long-term performance;

 

•

Aligns the executives’ long-term interests with those of our shareholders; and

 

•

Retains high-performing executives.

In the Compensation Discussion and Analysis and Compensation Tables beginning on page 26, we provide a detailed description of our executive compensation program, including our philosophy, the elements of our program and the compensation of our named executive officers. We encourage you to read these sections before deciding how to vote on this proposal.

This advisory resolution, commonly known as a “say-on-pay” resolution, is not binding on our Board of Directors. Nevertheless, the Board and the Human Resources Committee value shareholder feedback received through this annual say-on-pay vote and our direct investor outreach program. The voting results and direct shareholder input are carefully reviewed and considered and are an important part of the process for evaluating our executive compensation program.

 

				The Board of Directors recommends that you vote FOR this proposal.

 

Verizon 2021 Proxy Statement    25

 

 

Compensation Discussion and Analysis

The Human Resources Committee of the Board of Directors oversees the development and implementation of the compensation program for Verizon’s named executive officers.

 

2020 Incentive Compensation Program Changes

In 2019, we reorganized our operations around a customer-centric model with Verizon’s world class networks at the center of our strategy to drive innovation and new growth, creating the Business Group, the Consumer Group, the Global Network and Technology Group and the Media Group. In connection with this transformation, in June 2019, the Human Resources Committee undertook a holistic review of our incentive programs. As part of its review, the Committee considered how to strengthen the alignment between pay and performance and drive individual accountability for achieving operating results. The Committee also considered competitive market pay and market practices for incentive compensation and input from many of our largest investors.

While maintaining the core structure of our programs, in February 2020 the Committee implemented key changes to the performance measures, and the mix and weighting of the measures, for the short-term and long-term incentive programs for 2020. The Committee did not make any additional modifications to the design or results of these programs during 2020 due to COVID-19. See the section titled “2020 Short-Term Incentive Compensation” beginning on page 31 for the changes to the Short-Term Plan for 2020 and see the section titled “Long-Term Incentive Compensation” beginning on page 35 for the changes to the long-term incentive program for 2020 awards. Below are some highlights of those changes:

2020 Short-Term Incentive Program

 

•

Replaced adjusted earnings per share (EPS) with adjusted operating income as a performance metric at the corporate level in addition to total revenue, free cash flow and our ESG metrics to further focus our executives on our operating results.

 

•

Introduced unit-specific financial and operational performance metrics for business unit employees in addition to the corporate performance metrics to drive a culture of individual accountability while preserving a culture of collaboration and cooperation to achieve shared results and selected qualitative leading indicators for each unit to focus unit employees on annual strategic initiatives designed around the 5G strategy and other objectives that lay the groundwork for our long-term growth.

 

•

Increased the weight of the ESG metrics included in the corporate performance measures to strengthen our corporate purpose and culture.

 

•

Increased the maximum payout under the Short-Term Plan from 150% to 200% to align with market practice and provide an additional incentive to achieve stretch goals.

2020 Long-Term Incentive Program

 

•

Adjusted the performance metrics and weightings for the performance stock unit (PSU) component by incorporating adjusted EPS as a metric in addition to the free cash flow metric and retained relative total shareholder return (TSR) as a modifier to the PSU vesting percentage, comparing against the companies in the S&P 100.

 

•

Implemented pro-rated vesting upon an involuntary termination of employment from the Company without cause commencing with 2020 awards.

 

26    Verizon 2021 Proxy Statement

Compensation Discussion and Analysis

Best Practices in Executive Compensation and Governance

 

Best Practices in Executive Compensation and Governance

Our compensation program reflects our commitment to industry-leading standards for compensation design and governance. The Human Resources Committee regularly reviews best practices in executive compensation and governance and revises our policies and practices when appropriate. The following table highlights some features of our executive compensation program that demonstrate the rigor of our policies.

 

What We Do				More    Information    on Page
Pay for performance		Approximately 90% of named executive officers’ total compensation opportunity is variable, incentive-based pay.		30
Focus on performance: Exclude buybacks from EPS results		Our adjusted EPS metric under our Long-Term Incentive Plan (Long-Term Plan) excludes the benefit of any repurchases of Verizon’s common stock under a share buyback program.		37
Robust stock ownership guidelines		We have stock ownership guidelines for the CEO of 7x base salary; for other named executive officers of 4x base salary; and for Directors of 3x the cash component of the annual Board retainer.		41
Shareholder outreach		Our outreach program gives institutional shareholders a regular opportunity to express their views about our executive compensation program and policies. Shareholder input is carefully considered by the Committee.		28
Clawback policies		Our clawback policies give us the right to cancel or “claw back” incentive compensation from any senior executive who has engaged in misconduct that results in (i) significant reputational or financial harm to Verizon or (ii) a material financial restatement.		41
Anti-hedging policy		Our anti-hedging policy prohibits Directors and executives who receive equity-based incentive awards from entering into transactions designed to hedge or offset any decrease in the market value of Verizon stock that they own.		41
Annual compensation risk assessment		We perform a risk assessment of our compensation program every year.		20
Independent compensation consultant		The Committee’s independent compensation consultant cannot do any work for the Company while it is engaged by the Committee.		28
Double-trigger change in control		In the event of a change in control, our Long-Term Plan requires an involuntary termination without cause for any accelerated vesting of awards.		40
ESG metric		For the past 20 years, our short-term incentive program has included an ESG metric.		33

       What We Don’t Do

 

Tax gross-ups		We do not provide tax gross-ups to our executive officers or Directors.		39
Dividends on unearned performance awards		We do not pay dividends on unearned PSUs or Restricted Stock Units (RSUs).		35
Employment contracts		None of our named executive officers has an employment contract.		40
Guaranteed benefits		In 2006, we froze our defined benefit pension and supplemental executive retirement benefits.		40

 

Verizon 2021 Proxy Statement    27

Compensation Discussion and Analysis

Shareholder Feedback on Compensation

 

Shareholder Feedback on Compensation

Our Board, the Human Resources Committee and our management team value shareholder perspectives on our executive compensation program. Management and Directors engage with our institutional shareholders in meetings and calls throughout the year. Topics of discussion typically include the Committee’s choice of performance measures for awards issued under our Short- and Long-Term Incentive Plans, the relationship between the performance measures and our long-term strategy, the payout terms of equity awards, compensation recoupment policies and shareholder proposals, and our long-standing practice of including an ESG metric in our Short-Term Plan. In addition to this direct feedback, as part of the Committee’s annual review of the executive compensation program, the Committee considers the outcome of Verizon’s annual shareholder advisory vote on executive compensation – the “say-on-pay.” At our Annual Meeting in May 2020, the compensation of our named executive officers was approved by approximately 93% of votes cast. Based on the perspective obtained from discussions with our long-term shareholders, the results of our 2020 say-on-pay vote, and the history of strong shareholder support in prior say-on-pay votes, the Committee believes our shareholders continue to strongly support Verizon’s executive compensation program.

Roles and Responsibilities

Human Resources Committee

The Human Resources Committee of the Board of Directors oversees the design and implementation of the compensation program for our named executive officers, as well as Verizon’s management succession planning and talent development. The CEO’s compensation is determined by the independent members of the Board after receiving the Committee’s recommendation. References to the Committee in this Compensation Discussion and Analysis with respect to the CEO’s compensation reflect that process.

Management

The Committee may consult with the Executive Vice President and Chief Human Resources Officer about the design, administration and operation of the compensation program. The Committee has delegated administrative responsibility for implementing its decisions on compensation and benefits matters to the Chief Human Resources Officer, who reports to the Committee on the actions taken under this delegation.

The Committee seeks the CEO’s views on whether the existing compensation policies and practices continue to support Verizon’s business and performance objectives, utilize appropriate performance targets, and appropriately reward the contributions of the other named executive officers. While the Committee values the CEO’s insight, ultimately the Committee makes an independent determination on all matters related to the compensation of the named executive officers.

Independent Compensation Consultant

The Committee has the sole authority to retain and terminate a compensation consultant and to approve all terms of the engagement, including fees. The Committee retained Semler Brossy as its compensation consultant (Consultant). The Consultant advises the Committee on all matters related to the compensation of our named executive officers and our non-employee Directors. The Consultant’s advisory services include providing current benchmarking data for our peer group and other relevant market data in our industry and helping the Committee interpret this data, as well as data provided by the Company. The Consultant participates in all Committee meetings and confers regularly with the Committee in executive session at those meetings.

Committee policy prohibits the Consultant from doing any work for the Company during its engagement, and the Consultant did not perform work for the Company in 2020. The Committee made assessments of the Consultant under SEC rules and NYSE and Nasdaq listing standards and concluded that the Consultant was independent, and that its work in 2020 for the Committee did not raise any conflicts of interest.

 

28    Verizon 2021 Proxy Statement

Compensation Discussion and Analysis

Benchmarking Total Compensation Opportunity

 

Benchmarking Total Compensation Opportunity

The Committee evaluates whether the compensation opportunities for our executives are appropriate and competitive by comparing each named executive officer’s total compensation opportunity – which represents the sum of the executive’s base salary and target award amounts under the Short-Term Plan and the Long-Term Plan – to the total compensation opportunities for executives in comparable positions at peer companies, referencing the 50^th percentile when making this comparison. A named executive officer’s total compensation opportunity may be higher or lower depending upon the executive’s tenure and overall level of responsibility.

The peer groups utilized for compensation benchmarking are reviewed each year. For 2020 compensation decisions, the Committee utilized a peer group that consisted of the companies in the Dow Jones Industrial (Dow) Average (other than Verizon) with at least $50 billion in annual revenue, plus Verizon’s five largest industry competitors that are not included in the Dow. This represented a change to the peer group used for 2019 compensation determinations, which was composed of the 29 companies (other than Verizon) in the Dow, plus Verizon’s five largest industry competitors that are not included in the Dow (referred to as the Related Dow Peers). The Committee determined that utilizing this subset of the larger Related Dow Peer group for 2020 compensation decisions would better reflect market compensation for companies of Verizon’s size and complexity, while maintaining a robust number of peer companies for comparison purposes and providing clarity and transparency for shareholders.

Below are the companies included in the Company’s peer group for 2020 compensation purposes.

 

Apple		Goldman Sachs Group		Procter & Gamble
AT&T		Home Depot		Sprint Corporation
Boeing		IBM		T-Mobile US
Caterpillar		Intel		UnitedHealth Group
Charter Communications		Johnson & Johnson		United Technologies
Chevron		JPMorgan Chase		Walgreens Boots Alliance
Comcast		Microsoft		Walmart
Exxon Mobil		Pfizer		Walt Disney

Compensation Objectives and Elements of Compensation

Compensation Objectives

Verizon’s executive compensation program supports the creation of shareholder value by pursuing four key objectives:

 

•

Attract and retain high-performing executives with the leadership abilities and experience necessary to drive our customer-focused transformation of the digital market, within an enterprise of our scale, breadth and complexity;

 

•

Pay for superior results and sustainable growth by rewarding the achievement of challenging short- and long-term performance goals designed to build shareholder value;

 

•

Drive performance and create shareholder value by emphasizing variable, at-risk compensation with an appropriate balance of short-term and long-term objectives that align executive and shareholder interests; and

 

•

Manage risk through oversight and compensation design features, policies and practices that strike an appropriate balance between risk and reward.

 

Verizon 2021 Proxy Statement    29

Compensation Discussion and Analysis

Performance Target Setting

 

Elements and Mix of Compensation to Emphasize Long-Term Performance

The Committee determines the appropriate balance between fixed and variable pay elements, short- and long-term pay elements, and cash and equity-based pay elements when setting total compensation opportunities at competitive levels.

 

Pay Element		Characteristics		Purpose
Base Salary		Annual fixed cash compensation		Attract and retain high-performing and experienced executives
Short-Term Incentive Opportunity		Annual variable cash compensation based on the achievement of predetermined annual performance measures		Motivate executives to achieve short-term performance goals that will establish the foundation for future growth
Long-Term Incentive Opportunity		Long-term variable equity awards granted annually as a combination of performance-based stock units and time-based restricted stock units		Align executives’ interests with those of shareholders, encourage efforts to grow long-term value, and retain executives

The Committee believes that a substantial majority of each named executive officer’s total compensation opportunity should be variable and at risk in order to emphasize a performance-based culture. Moreover, since the annual Long-Term Plan awards feature three-year award cycles, with awards consisting of PSUs subject to both performance-based and time-based vesting requirements and RSUs subject to time-based vesting requirements, we reward sustained performance and also encourage high-performing executives to remain with Verizon.

In establishing the mix of incentive pay for the named executive officers, the Committee balances the importance of meeting Verizon’s short-term business goals with the need to create shareholder value over the longer term. The Committee also considered market data with respect to the mix of annual cash and long-term equity components for similarly situated executives among the peer group. Based on its review, the Committee established long-term target compensation opportunities at levels more than double the annual base salary and short-term incentive target compensation opportunities of the named executive officers.

Performance Target Setting

The Committee takes a holistic approach to establishing performance targets under our incentive plans and ensuring that they are aligned with Verizon’s short- and long-term strategic goals. In establishing performance targets, the Committee recognizes the importance of achieving an appropriate balance between rewarding executives for strong performance over both the short- and long-term and establishing realistic goals that continue to motivate and retain executives. As a result, our Short-Term and Long-Term Plans provide for measurable, rigorous performance targets that are attainable, but challenge executives to drive business results that generate shareholder value.

In setting the performance targets, the Committee considered the following factors:

 

•

Verizon’s short- and long-term strategy;

 

•

Economic, industry and competitive environments;

 

•

The creation of shareholder value;

 

•

The achievement level against performance targets in the prior year;

 

•

Financial analysts’ consensus estimates for the performance measures over future performance cycles;

 

•

The correlation among the performance measures and considerations of how Verizon’s operational performance will affect each measure differently; and

 

•

With regard to the environmental and social sustainability metric in the Short-Term Plan, Verizon’s commitments to reduce its environmental impact and promote diversity in its workforce and its business partners.

 

30    Verizon 2021 Proxy Statement

Compensation Discussion and Analysis

2020 Annual Base Salary

 

2020 Annual Base Salary

To determine an executive’s base salary, the Committee, with assistance from the Consultant, considers the pay practices of the peer group for comparable positions; the executive’s experience, tenure, scope of responsibility and performance; internal pay alignment; continuity planning and management development considerations; and for newly-hired executives, the Committee also considers the compensation required to attract the executive to the Company. There is no specific weighting applied to any of these factors in setting annual salaries, and the process ultimately relies on the subjective exercise of the Committee’s judgment. Based on its assessment of these factors, and taking into account the Committee’s decision to deliver increases to the appropriate total compensation opportunity for the named executive officers for 2020 in the form of increases to their long-term incentive award opportunities, none of the named executive officers received a base pay increase for 2020.

2020 Short-Term Incentive Compensation

The Verizon Short-Term Plan motivates executives to achieve challenging short-term performance targets in order to provide the foundation for future growth. Each year, the Committee establishes the potential value of the awards under the Short-Term Plan, as well as the performance targets required to achieve these awards.

In June 2019, the Committee undertook a holistic review of our incentive programs in connection with the 2019 reorganization of our operating units. As part of its review, the Committee considered how to strengthen the alignment between pay and performance and drive individual accountability for achieving operating results. The Committee also considered competitive market pay and market practices for incentive compensation and input from many of our largest investors. While we maintained the core structure of our programs, in February 2020, the Committee implemented the following key changes to the Short-Term Plan for the 2020 plan year, which are discussed in more detail below. The Committee did not make any additional modifications to the design or results for the Short-Term Plan during 2020 due to COVID-19.

 

•

Replaced adjusted EPS with adjusted operating income as a performance metric at the corporate level in addition to total revenue, free cash flow and our ESG metrics to further focus our executives on our operating results.

 

•

Introduced unit-specific financial and operational performance metrics for business unit employees in addition to the corporate performance metrics to drive a culture of individual accountability while preserving a culture of collaboration and cooperation to achieve shared results and selected qualitative leading indicators for each unit to focus unit employees on annual strategic initiatives designed around the 5G strategy and other objectives that lay the groundwork for our long-term growth.

 

•

Increased the weight of the ESG metrics included in the corporate performance measures to strengthen our corporate purpose and culture.

 

•

Increased the maximum payout under the Short-Term Plan from 150% to 200% to align with market practice and provide an additional incentive to achieve stretch goals.

The Committee set the values of the 2020 Short-Term Plan award opportunities as a percentage of an executive’s base salary based on both the scope of the executive’s responsibilities and the competitive pay practices of the peer group used for benchmarking our executives’ total compensation opportunity. The Short-Term Plan award opportunities at the threshold, target and maximum levels for each of the named executive officers are shown in the Grants of Plan-Based Awards table on page 45.

For the named executive officers, target award opportunities, expressed as a percentage of base salary, did not change for 2020. The following table shows the 2020 Short-Term Plan target award opportunity for each of the named executive officers.

 

Verizon 2021 Proxy Statement    31

Compensation Discussion and Analysis

2020 Short-Term Incentive Compensation

 

2020 Short-Term Plan Target Award Opportunity

 

Named Executive Officer		As a Percentage of Base Salary				As a Dollar Value
Mr. Vestberg			250%				$3,750,000
Mr. Ellis			150%				$1,425,000
Mr. Dunne			150%				$1,500,000
Ms. Erwin			150%				$1,275,000
Mr. Gowrappan			150%				$1,275,000

Annual Performance Measures

In February 2020, the Committee established the performance measures and targets for the 2020 Short-Term Plan. The Committee established financial, operational and ESG performance measures and targets at the Verizon corporate level that apply to all executives under the plan and established additional financial and operational performance measures and targets and qualitative leading indicators that apply to executives in each of the Company’s operating units – the Business Group, Consumer Group, Media Group and Global Network and Technology Group. The Short-Term Plan award opportunity for Mr. Vestberg and Mr. Ellis is determined solely by the Company’s achievement against the Verizon corporate performance measures. Fifty percent of the Short-Term Plan opportunity for Mr. Dunne, Ms. Erwin and Mr. Gowrappan is determined by the Company’s achievement against the Verizon corporate performance measures, and 50% is determined by the achievement of the financial and operational performance measures and qualitative leading indicators established for the respective unit that each leads. For each performance measure, the Committee set a target that challenges executives to drive business results that generate shareholder value. Verizon’s performance with respect to these applicable measures determines the amount of the short-term incentive awards earned by the named executive officers.

The 2020 performance measures, along with the weighting ascribed to each, are shown below as a percentage of the total Short-Term Plan award opportunity at target level performance. The Committee believes that these performance measures are appropriate to motivate Verizon’s executives to achieve outstanding short-term results and, at the same time, help establish the foundation for long-term value for shareholders. The 2020 measures and related targets approved by the Committee are described in detail below. The Committee did not make any modifications to the 2020 measures and targets due to COVID-19.

2020 Short-Term Plan Performance Measures

 

 

 

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For the unit-level performance measures, in addition to the Verizon corporate performance measures which make up 50% of the award opportunity for unit leaders, the Committee selected unit-level adjusted operating income and revenue to further focus the unit-level leaders on driving their individual unit’s contribution to Verizon’s overall profitability and growth. The Committee also selected qualitative leading indicators for each unit to focus unit leaders on annual strategic initiatives designed around the 5G strategy and other objectives that lay the groundwork for our long-term growth. At the end of the year, the CEO assesses the extent to which each unit has delivered on the leading indicators and will make a recommendation to the Committee on the level of attainment.    

 

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Compensation Discussion and Analysis

2020 Short-Term Incentive Compensation

 

2020 Adjusted Company Results¹

The Short-Term Plan provides for performance measures to be adjusted to exclude the impact of certain types of events not contemplated at the time the performance measures were set, such as significant transactions, changes in legal or regulatory policy and other special items. In determining Verizon corporate, Consumer Group and Business Group total revenue and adjusted operating income, the Committee made adjustments for impacts associated with strategic transactions during 2020 and for Consumer Group, Business Group and Media Group adjusted operating income, the Committee made adjustments for intercompany expense allocations. The Committee did not make any modifications to the 2020 targets or results due to COVID-19.

 

Verizon Corporate		Target		Results
Total Revenue		$135.8B		$128.4B
Adjusted Operating Income		$31.9B		$30.6B
Free Cash Flow		$18.6B		$23.6B
ESG (Diversity & Sustainability)
Diverse Supplier Spend2		$5.7B		$5.7B
Workforce Diversity		59.3%		59.7%
Carbon Intensity Reduction		10.0%		13.7%

 

				Consumer Group		Target		Results
				Total Revenue		$94.4B		$88.7B
				Adjusted Operating Income		$30.7B		$29.2B
				Leading Indicator		Execute on 5G Home & Mobility Strategy		Executed on 5G Home and Mobility Strategy in spite of COVID-19 pandemic: •  For Mobility, made available a robust 5G product lineup supported by a revised Mix and Match price plan •  For Home, launched 5G Home in 7 new U.S. cities and rolled out industry leading customer self-installation hardware
				Business Group		Target		Results
				Total Revenue		$31.7B		$30.9B
				Adjusted Operating Income		$3.694B		$3.883B
				Leading Indicator		Execute on 5G Multi-Access Edge Computing Strategy		Extended 5G leadership: •  Deployed 5G Edge with AWS wavelength to 10 U.S. cities •  Launched a private MEC solution with Microsoft, and developed a private 5G platform for global enterprises •  3 major companies became the first 5G indoor customers
				Media Group		Target		Results
				Total Revenue		$7.381B		$7.041B
				Adjusted Operating Income		($0.708B)		($0.608B)
				Leading Indicator		Execute on Strategic Development of Next Generation Advertising Platform		•  Achieved year-over-year advertising revenue growth in spite of COVID-19 pandemic impact on advertising spend •  Expanded large demand side advertiser customer base

 

Revenue		Adjusted Operating Income			Leading Indicator				Verizon Corporate Performance

 

1	A reconciliation of non-GAAP measures to the most directly comparable GAAP measures may be found in Appendix A.

2	For the twelve-month period ended November 30, 2020.

 

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Compensation Discussion and Analysis

Long-Term Incentive Compensation

 

2020 Short-Term Plan Awards

Based on its assessment of Verizon’s performance against the Verizon corporate measures and targets set forth above, the Committee approved a payout percentage for Verizon corporate of 97%. For each of the three business units – Consumer Group, Business Group and Media Group – the Committee considered both the level of performance with respect to each unit’s performance measures set forth above and took into consideration the CEO’s assessment of each unit’s level of achievement of the respective leading indicators to determine the payout percentage for the business unit. Based on its assessment, the Committee approved a payout percentage for the Consumer Group of 79%, the Business Group of 107% and the Media Group of 81%.

The following table shows the actual Short-Term Plan award earned by each named executive officer based on the payout percentages detailed above.

 

Named Executive Officer

Target Award

x

Payout Percentage

=

Actual Award

Mr. Vestberg

$3,750,000

Verizon Corporate – 97%

$3,637,500

Mr. Ellis

$1,425,000

Verizon Corporate – 97%

$1,382,250

Mr. Dunne

$1,500,000

Consumer Group – 79%

$1,185,000

Ms. Erwin

$1,275,000

Business Group – 107%

$1,364,250

Mr. Gowrappan

$1,275,000

Media Group – 81%

$1,032,750

Long-Term Incentive Compensation

The Long-Term Plan is intended to align executives’ and shareholders’ interests and to reward participants for creating long-term shareholder value.

Annual Long-Term Plan awards are made in 60% PSUs and 40% RSUs. The value of each PSU or RSU is equal to the value of one share of Verizon common stock. The Committee assumes each executive will earn 100% of the PSUs and RSUs awarded for purposes of determining the total compensation opportunity. PSUs and RSUs accrue dividend equivalents that are deemed to be reinvested in PSUs and RSUs, respectively. These dividend equivalents are paid when, and only to the extent that, the related PSUs and RSUs are actually earned. PSUs are earned over a three-year performance cycle, with cliff vesting at the end of the three-year period. The Committee believes that a three-year performance cycle is appropriate for the PSU awards because a multi-year performance cycle measures the effectiveness of management’s execution of long-term strategies and the effect on shareholder value. RSUs vest ratably over three years (as opposed to a single, longer cliff vesting schedule), which aligns with market practice and enables us to continue to attract and retain key executive talent.

Based on its holistic review of the Company’s incentive programs commencing in June 2019, and taking into consideration Verizon’s business strategy and focus, market data and competitive pay practices of our peer group and to further emphasize the focus on long-term profitability, in February 2020, the Committee implemented the following key changes to the Long-Term Plan awards for 2020:

 

•

Adjusted the performance metrics and weightings for the PSUs by incorporating adjusted EPS as a metric and equally dividing the weighting of the performance metrics to 50% based on Verizon’s cumulative free cash flow and 50% based on Verizon’s adjusted EPS over the three-year performance period.

 

•

Retained relative total shareholder return as a modifier to the PSU vesting percentage as compared against the companies in the S&P 100.

 

•

Implemented pro-rated vesting upon an involuntary termination of employment from the company without cause commencing with 2020 awards.

The number of PSUs actually earned and paid is determined based upon Verizon’s achievement of pre-established performance targets over the three-year performance cycle, and the ultimate value of each PSU is based on the closing price of Verizon’s common stock on the last trading day of the performance cycle. Because the value of PSUs is linked to both stock price and performance targets, PSUs provide a strong incentive to executives to deliver value to Verizon’s shareholders. RSUs also provide a performance link as the value of the award depends on Verizon’s stock price. Both PSUs and RSUs provide a

 

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Compensation Discussion and Analysis

Long-Term Incentive Compensation

 

retention incentive by requiring the executive to remain employed with Verizon through the end of the applicable vesting period, subject to certain qualifying separations. The 2020 PSUs and RSUs are payable in shares of Verizon stock.

2020 Long-Term Plan Award Opportunities

In 2020, the Committee established the annual target long-term incentive award opportunities for the named executive officers as a dollar amount, as opposed to as a percentage of their base salary, which was the method utilized in prior years. The Committee set the award levels to create an appropriate total compensation opportunity for these officers in light of the Committee’s reference of the 50^th percentile for comparable executives within the peer group and the compensation mix considerations described above, and taking into account market practices for each individual’s role and responsibilities, the individual’s performance, the strategic impact of the individual’s role and internal pay alignment.

The 2020 target award opportunity for the named executive officers was allocated between PSUs and RSUs as noted above, and the target award opportunity allocated to each type of award was converted into a target number of units using the closing price of Verizon’s common stock on the grant date.

The following table shows the target value of the 2020 Long-Term Plan awards granted to the named executive officers.

2020 Long-Term Plan Target Award Opportunity

 

Named Executive Officer		As a Dollar Value
Mr. Vestberg			$13,300,000
Mr. Ellis			$6,250,000
Mr. Dunne			$6,750,000
Ms. Erwin			$5,750,000
Mr. Gowrappan			$5,750,000

In 2020, the Committee determined that the Long-Term Plan award should incentivize our executives to focus on our long-term operational goals and to deliver superior total shareholder return performance, as well as encourage retention among our highly-qualified team. To that end, consistent with past practice, each of the named executive officers received 60% of their 2020 Long-Term Plan award in the form of PSUs and 40% in the form of RSUs. Fifty-percent of the 2020 PSUs is eligible to vest based on Verizon’s cumulative adjusted EPS and fifty-percent is eligible to vest based on Verizon’s cumulative free cash flow, and the number of PSUs that will ultimately vest may be decreased or increased by up to 25% depending on Verizon’s TSR position at the end of the three year period compared with the companies in the S&P 100 as constituted on the date the awards were granted. The adjusted EPS and free cash flow performance metrics are designed to focus our executives on our long term operational goals, with cumulative adjusted EPS focusing on our profitability and the cumulative free cash flow focusing on our ability to generate cash from operations. The TSR modifier is a valuable indicator of our success because it measures our performance in returning value to our shareholders in comparison to alternative investments our shareholders could have made. For purposes of measuring our TSR positioning, the Committee chose to utilize the companies in the S&P 100 index as opposed to the companies in the Related Dow Peer group, which had been used as the peer group for the TSR PSU portion of prior awards. The Committee made this change because it believes that the S&P 100 better balances having companies comparable to Verizon’s size in the comparator group with having a large enough number of companies to ensure that no one company overly impacts the outcomes in a given year and, further, that the S&P 100 is a recognized index, which is easy for shareholders and employees to track and understand.

 

 

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Compensation Discussion and Analysis

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Terms of 2020 PSU Awards

Adjusted Earnings Per Share Metric

Fifty-percent of the 2020 PSUs will vest based on Verizon’s cumulative adjusted earnings per share (EPS PSUs). The percentage of the EPS PSUs awarded for the 2020-2022 performance cycle that will vest is based on the extent to which Verizon’s cumulative adjusted EPS over the performance cycle meets or exceeds the cumulative adjusted EPS performance levels set by the Committee at the beginning of the performance cycle. Adjusted EPS is defined as Verizon’s cumulative earnings per share over the 3-year performance period, adjusted to exclude the impact of special items, including the benefit of any repurchases of Verizon’s common stock under a share buyback program, and is subject to adjustment to eliminate the financial impact of significant transactions, changes in legal or regulatory policy and other extraordinary items.

The cumulative adjusted EPS target for the 2020-2022 performance cycle was set at a level reflective of our three-year strategic plan, which the Committee believes is attainable, but challenging in light of the business environment. The number of EPS PSUs that will vest ranges from 0%, if actual performance is below the threshold level, to 200%, if actual performance is at or above the maximum cumulative EPS level. The number of EPS PSUs that will vest in-between identified performance levels is determined by linear interpolation between vesting percentage levels.

Free Cash Flow Metric

Fifty-percent of the 2020 PSUs will vest based on Verizon’s cumulative free cash flow (FCF PSUs). The percentage of the FCF PSUs awarded for the 2020-2022 performance cycle that will vest is based on the extent to which Verizon’s cumulative free cash flow over the performance cycle meets or exceeds the cumulative free cash flow performance levels set by the Committee at the beginning of the performance cycle. Free cash flow is calculated by subtracting capital expenditures from the total of cash flow from operations and is subject to adjustment to eliminate the financial impact of significant transactions, changes in legal or regulatory policy and other extraordinary items.

The cumulative free cash flow target for the 2020-2022 performance cycle was set at a level reflective of our three-year strategic plan, which the Committee believes is attainable, but challenging in light of the business environment. The number of FCF PSUs that will vest ranges from 0%, if actual performance is below the threshold level, to 200%, if actual performance is at or above the maximum cumulative free cash flow level. The number of FCF PSUs that will vest in-between identified performance levels is determined by linear interpolation between vesting percentage levels.

Total Shareholder Return Modifier

For 2020, the Committee retained the total shareholder return measure that had been utilized as a PSU performance metric in prior years in the form of a modifier to the total PSU award opportunity. After the Committee determines the extent to which the EPS PSU and FCF PSU performance measures have been achieved, the number of PSUs that will ultimately vest may be increased or decreased by up to 25% depending on Verizon’s TSR position compared with the companies in the S&P 100 as constituted on the date the awards were granted. If Verizon ranks at or above the 75^th percentile, the PSU vesting percentage will be increased by 25% (up to a maximum payout of 200%). If Verizon ranks at or below the 25^th percentile, the PSU vesting percentage will be decreased by 25%. If Verizon ranks at the median, there will be no change to the PSU vesting percentage, and for ranks in between the 25^th and 75^th percentile, the multiplier will be determined by linear interpolation between the levels.

 

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Compensation Discussion and Analysis

Long-Term Incentive Compensation

 

 

38    Verizon 2021 Proxy Statement