Pay-Fight Foes Blow Hot Air

The AFL-CIO, the largest U.S. trade union federation, named Ivan Seidenberg, Verizon's CEO, the "poster child" for its campaign against excessive executive pay. Next week, at Verizon's annual shareholder meeting, the union aims to unseat six Verizon directors in the belief that that will send a signal. At the launch of the AFL-CIO's 2007 Executive PayWatch Web site, union leader Richard Trumpka said "working people are fed up with a system that showers CEOs with lavish rewards with little or no accountability."

Ironically, unlike most CEOs, Seidenberg has no contract protection and instead serves at the will of the board, with his compensation 90% performance-based. He is earning only half what the union claims. Even though Verizon is the 11th-largest U.S. firm in revenue, 17th in income, 16th in market capitalization and 10th in total shareholder returns, it is only 26th in CEO compensation.

Furthermore, Seidenberg has just the profile that shareholders should want at the helm. A former union member, he has climbed the ranks from his first job as a cable splicer's assistant to rewiring the whole enterprise. He drove the moves that built Verizon out of Nynex, Bell Atlantic and GTE, and after each deal the new board returned him to power on the basis of merit. He guided the effort that built Verizon Wireless, the premier wireless business, into a $50 billion giant itself. Now he has led the industry in massive technology investments such as new fiber-optic lines to our homes that will not pay out overnight but will give Verizon's future a huge leap.