The AFL-CIO, the largest US trade union federation, is to make Ivan Seidenberg, Verizon Communications’ chief executive, the “poster child” for its campaign against excessive executive pay after previously targeting the chief executives of Pfizer and Home Depot.
Richard Trumka, the AFL-CIO’s secretary-treasurer, noted that Mr Seidenberg had earned more than $109m in the past five years, despite negative total shareholder returns during the same period of about 5 per cent.
The AFL-CIO’s decision last year to mount what it described as a “successful campaign” against Pfizer and Home Depot helped fuel growing investor concern about performance of chief executives and their severance packages.
In the wake of that campaign, Hank McKinnell, Pfizer’s former chief executive, stepped down in July after accumulating a $198m exit package while Home Depot’s Robert Nardelli secured a $210m severance deal when he resigned by mutual agreement with the company in January.
“Working people are fed up with a system that showers CEOs with lavish rewards with little or no accountability,” Mr Trumka said at the launch of the AFL-CIO’s 2007 Executive PayWatch website at the end of last week.
“We call upon Congress and the SEC to give long-term investors the tools they need to ensure that boards are composed of independent directors who are ready to hold management accountable to the long-term best interests of public corporations.”
Under Mr Siedenberg, Verizon has invested heavily in growth areas including Verizon Wireless, its joint venture with Vodafone of the UK, and in the introduction of TV and other advanced data services over a new fibre-based network dubbed ‘Fios’ in an effort to offset declining traditional voice lines.
However, heavy investment and concerns about Verizon’s video strategy – designed to compete with cable TV companies – have held back the company’s share price and shareholder returns.
“Through a ‘vote no’ on Verizon’s compensation committee and three important shareholder proposals, we will lead the effort to clean up this company’s governance,” Mr Trumka said. Verizon is due to hold its annual shareholder meeting on May 3 in New York.
Peter Thonis, a spokeman for Verizon, said: “This is really about the union’s disputes with Verizon on organizing issues and has nothing to do with CEO compensation.
“Verizon is among the most transparent companies regarding senior executive pay, and in fact our CEO works without an employment contract or annual pension benefits and he no longer accrues future pension benefits.”
The PayWatch site features six case studies, including Home Depot and Pfizer, designed to highlight how corporate executives have benefited from large severance packages and stock options backdating at the expense of companies and their shareholders.