How is the CEO's compensation determined under these new awards?

The payout for both the restructured 2005 PSUs and the 2006 PSUs is determined by Verizon's Total Shareholder Return (TSR) compared to industry peers and the S&P 500 over a three-year period. Additionally, achieving specific strategic objectives, such as the launch of Verizon Business and growth in broadband and wireless, can influence the payout level, with a cap on the maximum payout for the 2005 award.

What are the key performance indicators for these incentive awards?

The key performance indicators are Verizon's Total Shareholder Return (TSR) relative to specific benchmarks (S&P 500 and industry peers) and the achievement of strategic objectives, including the successful launch of Verizon Business, progress on legislative initiatives, FiOS and broadband expansion, and wireless growth objectives.

What is the significance of restructuring the 2005 award?

Restructuring the 2005 award signifies a shift towards performance-based compensation for the CEO, aligning his incentives more directly with the company's long-term strategic goals and shareholder value creation, particularly in the context of the ongoing business transformation and the launch of Verizon Business.

VZ 8-K: Material Agreements

Q: What is the main purpose of this 8-K filing?

The main purpose of this filing is to disclose the restructuring of Verizon's CEO Ivan Seidenberg's 2005 long-term incentive award and the approval of his 2006 long-term incentive award. Both awards are now structured as performance stock units (PSUs) with payouts tied to company performance and strategic objectives.

Summary

This 8-K filing from Verizon Communications Inc. reports on a significant restructuring of the long-term incentive award for its Chairman and CEO, Ivan Seidenberg, and the approval of his 2006 long-term incentive award. The company has converted Mr. Seidenberg's 2005 restricted stock unit award into performance stock units (PSUs) with a target value of $11.34 million. The payout of these PSUs is tied to Verizon's Total Shareholder Return (TSR) relative to the S&P 500 and industry peers over a three-year period, with a minimum performance threshold required for any payout. Furthermore, the restructured 2005 award and the new 2006 award (valued at $13.125 million) include strategic objectives. These objectives are linked to the successful launch of Verizon Business, legislative initiatives, FiOS and broadband expansion, and wireless growth. The Committee can adjust the PSU payout based on achieving these strategic goals, but the maximum payout for the 2005 PSUs is capped at 200% of the target value. This move underscores the company's focus on executive compensation aligned with key strategic initiatives and shareholder value creation.

Key Highlights

1Verizon restructured CEO Ivan Seidenberg's 2005 long-term incentive award, converting it to 314,480 performance stock units (PSUs) valued at $11.34 million.
2The PSU payout is contingent upon Verizon's Total Shareholder Return (TSR) relative to the S&P 500 and industry peers over a three-year performance cycle.
3A minimum relative TSR threshold must be met for any portion of the 2005 PSUs to be paid out.
4The 2005 PSU award includes strategic objectives related to the launch of Verizon Business, legislative initiatives, FiOS, broadband, and wireless growth.
5The Human Resources Committee can modify the 2005 PSU payout based on achieving these strategic targets, with a maximum payout capped at 200% of the target value.
6The company also approved Mr. Seidenberg's 2006 long-term incentive award of $13.125 million, also in the form of PSUs tied to similar performance metrics and strategic objectives.

VERIZON COMMUNICATIONS INC 8-K Report, Material Agreement (Mar 7, 2006)

Summary

Key Highlights

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