PAY HANGUP
After claiming victory in campaigns that led to the ouster of the head honchos at Home Depot and Pfizer over their bloated pay packages, the nation’s largest labor-union group is now targeting the CEO of telephone giant Verizon Communications.
But the AFL-CIO’s push may get hung up on one important detail: two of the most influential corporate governance watchdog groups say Verizon CEO Ivan Seidenberg’s compensation isn’t out of line with the paychecks pocketed by his rivals at companies such as AT&T and Sprint.
The AFL-CIO gripes that Seidenberg has raked in more than $109 million over the past five years, while shareholders in the New York-based telephone company have seen their stakes lose 5 percent.
“Working people are fed up with a system that showers CEOs with lavish rewards with little or no accountability,” says AFL-CIO secretary-treasurer Richard Trumka.
To send a message to Verizon, the AFL-CIO is urging shareholders to “vote no” for the re-election of the six board members responsible for setting Seidenberg’s compensation.
The uproar caused by similar “pay rage” campaigns last year led to Home Depot chief Robert Nardelli and Pfizer boss Henry McKinnell losing their jobs.
But the AFL-CIO might not build enough support to send a similar signal to Verizon.
The activist union has failed to persuade the two most powerful proxy-advisory firms, Institutional Shareholder Services (ISS) and Glass Lewis & Co., to join its cause.
ISS, which advises major mutual funds and pensions on issues of good corporate behavior, is telling its clients that Seidenberg’s pay isn’t unreasonable.
ISS says investors should vote in favor of the six directors that set compensation for Seidenberg, who got his start in the phone business in 1966 shimmying down manholes to splice wires.
ISS says he was overpaid in 2005, but in 2006 his $21 million compensation wasn’t “excessively out of line” with top executives at companies such as AT&T, Sprint Nextel and Time Warner.
ISS also notes that Verizon’s one-year shareholder returns are significantly ahead of the Standard & Poor’s 500 Stock Index.
Glass Lewis was putting the finishing touches on a report for its clients over the weekend that reaches similar conclusions about Seidenberg’s compensation, sources said.
Without the support of those firms and major institutional investors, the AFL-CIO might be lucky to persuade as much as 5 percent of investors to vote against the directors.
That’s a far cry from the more than 30 percent of withhold votes by angry investors at last year’s Home Depot shareholder meeting.
For its part, Verizon disputes the figures tallied by the AFL-CIO, saying Seidenberg earned less than half the amount the group is touting.
“Their campaign really has nothing to do with executive compensation,” says Verizon spokesman Peter Thonis. “It’s because they’re frustrated by their inability to unionize parts of Verizon.”
Thonis adds that, unlike the multi-million dollar golden parachutes awarded to Nardelli and McKinnell when they lost their CEO jobs, Seidenberg doesn’t have a severance package.
Representatives from the AFL-CIO couldn’t be reached for comment.