Verizon proxy vote on exec pay too close to call

In this file photo traffic passes Verizon Communications Inc. headquarters in New York, February 14, 2005. A shareholder proposal seeking a say over executive compensation at Verizon Communications won nearly 50 percent of votes on Thursday and the company said the vote was too close to call.

NEW YORK (Reuters) - Verizon Communications Inc. (VZ.N) may become the first U.S. company where a controversial "say on pay" resolution has been adopted by investors, depending on the final outcome of a close vote on Thursday.

At the telecommunications groups' annual meeting, a "say on pay" resolution filed by investors won nearly 50 percent of the votes and the company said the result was too close to call.

The resolution requests the company's board of directors to adopt a policy giving shareholders an annual, non-binding vote on senior executive pay packages, including that of Chairman and Chief Executive Ivan Seidenberg.

Some shareholders have complained that Seidenberg's pay package was too high considering their investment returns.

Dozens of "say on pay" resolutions have been put forward this year by shareholders at major U.S. corporations amid controversy over soaring executive compensation.

Verizon, the No. 2 U.S. phone company, said a preliminary vote count "approached 50 percent" in favor of the proposal and a final result would be announced in the next few weeks.

"Whether it ultimately surpasses 50 percent or edges close to that line, the vote at Verizon packs a powerful message. Verizon should adopt the proposal," said Amy Borrus, deputy director of the Council of Institutional Investors, an investor rights group representing 130 major pension funds.

Verizon shares have risen over 25 percent in the past year, but are well off their 1999 peak of $69.50.

Seidenberg's 2006 total compensation was over $20 million, according to an SEC filing.

Bill Jones, president of the Association of Bell Tel Retirees, which supported the "say on pay" proposal, said he viewed the vote favorably regardless of the final result.

"Most of our proposals, whether they win or lose, promote change. They always move, maybe not completely, but in the direction that the proposal is aiming at. I suspect we've got a good chance on this one," he told Reuters over the phone.

The company said that even if the proposal was adopted, it would not be binding. But Seidenberg said he would take the proposal into consideration, it said.

Verizon shares rose 4.09 percent to $41.22 on Thursday, after quarterly results from Cablevision Systems Corp. (CVC.N) showed it was losing customers to the phone company's new FiOS video and Internet service.

The U.S. House of Representatives approved a bill last month to give shareholders nationwide the right to cast nonbinding votes on the pay of top executives, handing investor advocates a victory and defying the Bush administration.

The bill would require corporations to hold symbolic shareholder votes on pay each year, although they could ignore the outcome. The measure is meant to make boards of directors think twice before giving massive pay packages to managers.

Illinois Democratic Sen. Barack Obama, a 2008 presidential hopeful, has introduced the measure in the Senate. The White House has said it opposes the bill.

In 2003, the average U.S. CEO got about 500 times the pay of the average worker, up from a multiple of 140 as recently as 1991, one academic study has shown.

Insurer AFLAC Inc. (AFL.N) in February voluntarily became the first major U.S. company to adopt "say on pay."

Shareholder resolutions calling for advisory votes on pay have failed at four other recent annual shareholder meetings, including those of Citigroup (C.N), Coca-Cola Co. (KO.N), Morgan Stanley (MS.N) and Bank of New York Co. (BK.N).

(Additional reporting by Kevin Drawbaugh in Washington)