By Ross Kerber
BOSTON Dec 11 Verizon Communications Inc
told activist investors on Wednesday that it might skip a vote
on a shareholder proposal that seeks details on the company's
cooperation with government surveillance efforts.
Verizon's law firm Jones Day said in a Nov. 25 letter that
the company would exclude the measure from its 2014 proxy
statement unless the activists did more to verify their
eligibility to file the proposal.
The company's response appears to be more aggressive than
the stance AT&T Inc took against a similar proposal, said
Jonas Kron, senior vice president for Trillium Asset Management,
a co-filer of the measures at both telecommunications companies.
Kron said Trillium has provided more detail, but that
Verizon's action suggests it will sidestep the usual process in
which companies ask the U.S. Securities and Exchange Commission
for permission to skip votes on shareholder proposals.
"If they are going to challenge the shareholder proposal, I
hope they will work within the SEC process," Kron said.
Verizon spokesman Bob Varettoni said the company's response
"At this point, we have not taken any formal position on the
proposal," he wrote. "The SEC requires shareholders to
demonstrate their eligibility to submit a proposal. We've simply
sought the information that we believe is necessary to determine
the proponent's eligibility."
A spokesman for the SEC declined to comment.
PREPARING FOR SPRING
The dispute at Verizon is just one of many playing out this
month ahead of the spring when shareholder meetings usually take
place. Generally, corporate shareholders who own $2,000 worth of
stock for a year may file proposals for a vote by all investors.
But the rise of proposals with a social agenda or those put
forth by labor groups has prompted many companies to push back,
often by seeking SEC permission to skip the measures. The agency
grants such permission about half the time.
To back up their requests, companies typically argue that
shareholders are putting forth ideas that should be treated as
"ordinary business" rather than subject to a shareholder vote,
or that, if passed, their proposals could hamper other company
operations. AT&T made both of those arguments earlier this month
and Verizon could seek SEC permission.
Both AT&T and Verizon shareholders, including Trillium and
New York State Comptroller Thomas DiNapoli, who oversees the
state's pension fund, had filed measures calling for details of
their cooperation with U.S. and foreign spy agencies.
In the wake of revelations by former U.S. National Security
Agency contractor Edward Snowden, the shareholders cited media
reports of intelligence agencies' involvement with the companies
and criticism from foreign leaders.
The activists asked both companies to schedule votes on a
measure calling for the publication of semi-annual reports with
details such as how often customer information was shared with
In the Nov. 25 letter, Verizon's attorney at Jones Day told
Trillum's Kron the company intended to exclude the surveillance
proposal from its proxy filing unless it corrected what it
called "procedural deficiencies."
Among other things, the firm wrote that material Trillium
submitted had not demonstrated an investor was a shareholder
entitled to vote the shares. Trillium responded to Verizon on
Dec. 9 with additional material, but said the firm did not
concede the extra proof was necessary.