What happens to the existing deferred compensation plans for executives and directors?

The "Verizon Income Deferral Plan" and the "Verizon Deferred Compensation Plan for Non-Employee Directors" are being frozen as of December 31, 2004. No new benefits will accrue under these plans, although participants can still invest their existing account balances. Any unvested benefits will be transferred to the new "Verizon Executive Deferral Plan."

How does the amendment to the Verizon Excess Pension Plan affect senior managers?

Effective January 1, 2005, all senior managers will participate in the "Verizon Excess Pension Plan." They will receive pay credits ranging from 4% to 7% on eligible compensation exceeding the IRS qualified pay limit, aligning their supplemental retirement benefits with those of other management employees.

Why is Dennis F. Strigl moving to the Verizon Communications Inc. payroll?

Dennis F. Strigl, an Executive Vice President, is moving from the Verizon Wireless payroll to the Verizon Communications Inc. payroll to align his benefits and compensation structure with those of other top executive officers of Verizon. This ensures a consistent benefits package across the company's senior leadership.

VZ 8-K: Material Agreements

Q: What is the main reason for these changes to Verizon's executive and director compensation plans?

The primary reason for these changes is to ensure compliance with new federal tax legislation, specifically Section 885 of the American Jobs Creation Act of 2004 and Section 409A of the Internal Revenue Code, which introduced new regulations for nonqualified deferred compensation plans.

Summary

Verizon Communications Inc. (VZ) filed an 8-K report on December 6, 2004, detailing significant changes to its executive and director compensation and benefits plans, effective January 1, 2005. The primary driver for these changes is compliance with new federal legislation, specifically Section 885 of the American Jobs Creation Act of 2004 and Section 409A of the Internal Revenue Code. Key changes include the adoption of a new "Verizon Executive Deferral Plan" to accommodate deferred compensation and supplemental savings, while freezing existing "Verizon Income Deferral Plan" and "Verizon Deferred Compensation Plan for Non-Employee Directors." Additionally, the "Verizon Excess Pension Plan" was amended to include all senior managers, aligning their benefits with other management employees. Finally, a change in payroll and benefit plan participation for Executive Vice President Dennis F. Strigl is outlined to synchronize his compensation structure with other top Verizon executives.

Key Highlights

1Verizon adopted the "Verizon Executive Deferral Plan" effective January 1, 2005, to comply with new tax legislation (American Jobs Creation Act of 2004 and Internal Revenue Code Section 409A).
2Existing "Verizon Income Deferral Plan" and "Verizon Deferred Compensation Plan for Non-Employee Directors" will be frozen as of December 31, 2004, with no new benefits accruing under these plans.
3Unvested benefits from the frozen plans will be transferred to the new Executive Deferral Plan.
4The "Verizon Excess Pension Plan" was amended to include all senior managers, effective January 1, 2005, providing them with pay credits of 4% to 7% on eligible compensation exceeding IRS limits.
5This change aligns senior managers' pension benefits with other management employees who already participate in similar plans.
6Executive Vice President Dennis F. Strigl will move from the Verizon Wireless payroll to Verizon Communications Inc. payroll effective January 1, 2005.
7Mr. Strigl will transition to Verizon's health, disability, and pension plans, aligning his benefits with other senior executives.

VERIZON COMMUNICATIONS INC 8-K Report, Material Agreement (Dec 7, 2004)

Summary

Key Highlights

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