What is the primary purpose of these performance stock unit grants?

The primary purpose is to support Verizon's long-term growth strategy and ongoing succession planning by incentivizing key senior executives, John F. Killian and Lowell C. McAdam, to achieve specific financial performance targets and maintain their employment with the company.

How will the vesting of these stock units be determined?

Vesting is directly tied to Verizon's Return on Equity (ROE) over a three-year period ending December 31, 2012. A minimum ROE threshold must be met for any vesting, and higher ROE achievement can result in up to double the nominal grant amount vesting.

What are the implications of the holding period for the executives?

The mandatory two-year holding period for vested shares after the performance cycle concludes demonstrates a strong commitment to aligning executive interests with those of long-term shareholders. It ensures that executives remain invested in the sustained performance and value of Verizon's stock.

What is the significance of these grants in relation to Verizon's stock price?

The value of the performance stock units fluctuates with Verizon's common stock price, and the potential payout is directly linked to the company's financial performance (ROE). This structure aims to reward executives for creating shareholder value.

VZ 8-K: Leadership Changes

Summary

Verizon Communications Inc. filed an 8-K report on December 23, 2009, detailing a special grant of performance stock units to two key senior executives: John F. Killian, Executive Vice President and Chief Financial Officer, and Lowell C. McAdam, Executive Vice President & President and CEO of the Verizon Wireless Joint Venture. These grants are part of an ongoing succession planning effort and are designed to incentivize long-term growth and align executive compensation with shareholder value. The grants are contingent upon Verizon's financial performance, specifically its return on equity (ROE) over a three-year period ending December 31, 2012. The performance stock units have a potential to vest at up to double the initial grant amount, depending on the achievement of minimum and maximum ROE thresholds. Importantly, executives must remain employed throughout the performance cycle and are required to hold the vested shares for an additional two years, reinforcing a strong link between executive interests and the company's long-term stock performance. This move reflects a strategic approach to retaining and motivating top talent while emphasizing accountability to shareholders.

Key Highlights

1Verizon awarded performance stock units to CFO John F. Killian and Verizon Wireless CEO Lowell C. McAdam on December 18, 2009.
2The grants are part of Verizon's succession planning and are designed to align executive compensation with long-term company growth.
3Vesting of these stock units is contingent on Verizon's Return on Equity (ROE) over a three-year performance cycle ending December 31, 2012.
4The potential payout can be up to double the nominal number of units granted, based on achieving specific ROE targets.
5Executives must remain employed through the performance cycle for any vesting to occur.
6A mandatory two-year holding period for vested shares is imposed on both executives after the performance cycle concludes.
7If fully vested, the grants were valued at approximately $4.5 million each (plus dividends) based on the stock price on the grant date.

VERIZON COMMUNICATIONS INC 8-K Report, Executive Changes (Dec 23, 2009)

Summary

Key Highlights

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