U.S. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 NOTICE OF EXEMPT SOLICITATION 1. Name of the Registrant: VERIZON COMMUNICATIONS, INC. 2. Name of person relying on exemption: ASSOCIATION OF BELLTEL RETIREES, C. WILLIAM JONES, MICHAEL S. MICHAEL S. KUCKLINCA, EILEEN T. LAWRENCE, JOHN SELLEN, JOHN M. BRENNAN, JAMES E. CASEY, JR., LOUIS MIANO, JOHN A. PARENTE, ROBERT E. REHM AND JOSEPH A. RISTUCCIA 3. Address of person relying on exemption: P.O. Box 33, Cold Spring Harbor, NY 11724 4. Written materials. Attach written materials required to be submitted pursuant to Rule 14a-6(g)(1) [sec. 240.14a-6(g)(1)] Association of BellTel Retirees, Inc. Post Office Box 33 Cold Spring Harbor, New York 11724 (logo) _________________________________________________________________ Phone: (631) 367-3067 Web Site: www.belltelretirees.org Fax: (631) 367-1190 E-mail: email@example.com March 29, 2002 Board of Directors C. William Jones DEAR FELLOW VERIZON SHAREHOLDER: President (410) 770-9485 We urge you to VOTE FOR three important shareholder resolutions on Verizon's Michael S. Kucklinca proxy card for the upcoming Annual Executive Vice President Meeting on April 24 in Minneapolis. (516) 741-2424 PROXY ITEM NO. 6 deserves your special Eileen T. Lawrence attention and support. We believe it is Treasurer critical that executive compensation be (718) 229-6078 tied more closely to a truly relevant and transparent measure of operating John Sellen income. The resolution in Proxy Item Secretary No. 6 asks the Board to determine future (201) 261-1454 awards of performance-based compensation for executive officers using a measure John M. Brennan of earnings that does NOT include Director - accounting rule income, particularly BA South "pension credits" resulting from (201) 666-8174 projected increases in the employee pension fund surplus. James E. Casey, Jr. Vice President - WE URGE YOU TO VOTE YOUR PROXY Information Systems FOR PROPOSALS 4, 5 AND 6. (540) 439-9568 In recent years a substantial portion of Louis Miano Verizon's reported earnings has not been Vice President - cash flow from ordinary operations, but Public Relations rather accounting credits from projected (781) 444-8080 increases in the employee pension fund surplus. According to Merrill Lynch,/1/ John A. Parente in 2000 Verizon used pension credits Vice-President - to boost its reported earnings by $3.5 Membership Dev. billion, the largest contribution to (518) 372-0526 reported earnings among all S&P 500 companies./2/ Robert A. Rehm Vice President - "THE MAGNITUDE OF THE PENSION CREDIT Finance INCREASE RELATIVE TO THE CHANGE IN NET (516) 827-0801 INCOME CLEARLY IS AN ADVERSE ISSUE WHEN ASSESSING THE QUALITY OF VERIZON'S Joseph A. Ristuccia EARNINGS." - - MERRILL LYNCH/3/ Vice President Government Relations During the first six months of 2001, (631) 765-1111 Verizon's $1.1 billion in pension credits actually EXCEEDED the $733 million in net income before extraordinaries reported to shareholders. Because pension credits potentially can turn even operating losses into reported gains, we believe that they should not be included in the benchmark for performance-based pay. We agree with proponents that increases in the pension surplus should NOT be used to calculate performance-based compensation for the following reasons: PENSION SURPLUSES DO NOT MEASURE OPERATING PERFORMANCE. "The pension aspect of performance has nothing to do with the current performance of management," according to the publisher of THE ANALYST'S ACCOUNTING OBSERVER./4/ Pension credits do nothing to increase cash flow. In practice, the pension surplus is not available to pay dividends, finance investments, or for other operating purposes. ________________
/1/ Merrill Lynch, "Making Sense of Pensions," August 1, 2001. /2/ David Henry, "Why Earnings Are Too Rosy," BUSINESS WEEK, August 13, 2001; Credit Suisse First Boston, "Pension Accounting Primer," June 13, 2001. /3/ Merrill Lynch, "Making Sense of Pensions," August 1, 2001. /4/ Jack Ciesielski, "Pondering Pensions: Addendum," THE ANALYST'S ACCOUNTING OBSERVER, June 11, 2001. PENSION CREDITS CAN BE "PHANTOM INCOME." Pension income often does not even reflect actual pension investment gains, since the credits are based entirely on "expected returns" using assumptions set by management. Verizon's 10-K filing for 2000 revealed that although the $3.5 billion pension credit to earnings was premised on an "expected return" on pension assets of $4.7 billion, the ACTUAL return was $1.3 billion. WE ALSO URGE YOU TO SUPPORT TWO OTHER SHAREHOLDER PROPOSALS ON THE 2002 PROXY: - - ITEM NO. 4 REQUESTS ADVANCE SHAREHOLDER APPROVAL FOR FUTURE GOLDEN PARACHUTE" SEVERANCE AGREEMENTS WITH THE COMPANY'S TOP EXECUTIVE OFFICERS. Verizon's executive officers are covered by lucrative parachute provisions that can be triggered not only by a hostile change of control, but even by VOLUNTARY resignation under a range of circumstances we believe are contrary to shareholder interests. For example, if co-CEO Ivan Seidenberg had resigned during 2001 under this broad "change of control" definition, he would have received $10 million in "Incentive Awards" and, through June 2004, continuation of his base pay ($1.5 million) plus 10.5 times base pay each year in short- and long-term bonuses (the maximum he could have earned). Co-CEO Charles Lee's parachute is even more generous, in our view, as he could have received nearly the same compensation whether he decided to stay or leave. - - ITEM NO. 5 URGES THE BOARD TO AMEND THE BY-LAWS TO REQUIRE A MAJORITY OF INDEPENDENT DIRECTORS AND LIMIT THE NUMBER OF "INSIDERS" TO TWO. Our Board's lack of independence is unusual among leading public companies. Among S&P 500 companies, 89% have a majority of independent directors, as defined by the Council of Institutional Investors./5/ In contrast, at least eight of Verizon's 16 directors are non-independent. In addition to the two co-CEOs, six outside directors are viewed as non-independent due to board interlocks or because their own employer receives grants, fees, or business from the Company, or did in the recent past. While the Board claims it is sufficiently independent based on its own more permissive definition, we believe that a By-Law based on CII's definition of "independent" is needed to ensure the Board is at all times more accountable to stockholders than it is beholden to management. I hope you will join me and VOTE YOUR SHARES YES ON PROXY ITEMS 4, 5 and 6. Sincerely yours, C. William Jones President, Association of BellTel Retirees Inc. (text box) The cost of this letter is being borne entirely by the Association of BellTel Retirees. This is not a solicitation. Please DO NOT send your proxy card to the Association. Permission to quote articles and reports cited in this letter has neither been sought nor obtained. /5/ Investor Responsibility Research Center, "Board Practices/ Board Pay 2001," p. 10, which also estimates that 69% of all S&P 500 directors are independent using a definition of "independent" that is virtually identical to the one adopted by proponents here and by the Council of Institutional Investors.