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Verizon Workers Announce Strike Deadline of Wednesday, April 13th

TELECOM GIANT MAKES $1.8 BILLION A MONTH IN PROFIT, BUT SEEKS TO DESTROY GOOD JOBS FOR NEARLY 40,000 EAST COAST WORKING FAMILIES

After trying for ten months to reach a fair contract, nearly 40,000 Verizon workers from Massachusetts to Virginia will go on strike at 6 a.m. on Wednesday, April 13 if a fair agreement is not reached by then. The Verizon strike will be by far the largest work stoppage in the country in recent years.

“We’re standing up for working families and standing up to Verizon’s corporate greed,” said CWA District 1 Vice President Dennis Trainor. “If a hugely profitable corporation like Verizon can destroy the good family-supporting jobs of highly skilled workers, then no worker in America will be safe from this corporate race to the bottom.”

Even though Verizon made $39 billion in profits over the last three years — and $1.8 billion a month in profits over the first three months of 2016 — the company wants to gut job security protections, contract out more work, offshore jobs to Mexico, the Philippines and other locations and require technicians to work away from home for as long as two months without seeing their families. Verizon is also refusing to negotiate any improvements in wages, benefits or working conditions for Verizon Wireless retail workers, who formed a union in 2014.

“More and more, Americans are outraged by what some of the nation’s wealthiest corporations have done to working people over the last 30 years, and Verizon is becoming the poster child for everything that people in this country are angry about,” said Edward Mooney, Vice President, CWA District 2-13.”  This very profitable company wants to push people down. And it wants to push communities down by not fully repairing the network and by not building out FIOS.”

With negotiations at a standstill even as workers have offered hundreds of millions of dollars in healthcare cost savings, support for a fair contract is growing. Last month, 20 U.S. Senators sent a letter to Verizon CEO Lowell McAdam calling on him to “act as a responsible corporate citizen and negotiate a fair contract with the employees who make your company’s success possible.” And the working families of Verizon are reaching out to the public about the threat the corporation is posing to communities up and down the East Cost, including a new 30-second ad about the company’s efforts to offshore and relocate jobs.

“Verizon is already turning people’s lives upside down by sending us hundreds of miles from home for weeks at a time, and now they want to make it even worse,” said Dan Hylton, a technician and CWA member in Roanoke, Va., who’s been with Verizon for 20 years. “Technicians on our team have always been happy to volunteer after natural disasters when our customers needed help, but if I was forced away from home for two months, I have no idea what my wife would do. She had back surgery last year, and she needs my help. I just want to do a good job, be there for my family, and have a decent life.”

The Verizon negotiations began in June 2015, and the workers’ contract expired on August 1. At the same time, Verizon’s CEO is making 200 times more than the average Verizon employee, and the company’s top five executives made $233 million over the last five years.

“For months and months, we’ve made every effort to reach a fair agreement at the bargaining table,” said Myles Calvey, IBEW Local 2222 business manager and chairman, T-6 Verizon New England. “We’ve offered Verizon hundreds of millions of dollars in cost savings and yet they still refuse to provide basic job security for workers. We have to take a stand now for our families and every American worker.”

Even after significant worker concessions on healthcare, Verizon is attempting to make devastating cut backs, including:

  • Offshoring and contracting out even more customer service work to Mexico, the Philippines and other locations.
  • Cutting job security for all workers.
  • Requiring technicians to work away from home for as long as two months, without seeing their families. For anyone trying to balance work and family life, this is impossible.
  • Refusing to negotiate improvements to wages, benefits and working conditions for Verizon Wireless workers, who formed a union with CWA in 2014.
  • Freezing pensions at 30 years of service and forcing retirees to pay extremely high health care costs.
  • Slashing benefits for workers injured on the job.

Verizon’s corporate greed isn’t just harming workers’ families, it’s hurting customers as well. Service quality has deteriorated to the point that New York State’s Public Service Commission has convened a formal hearing to investigate problems across the Empire State. In the last few weeks, regulators in Pennsylvania and New Jersey have launched similar inquiries into Verizon’s operations.

For years, Verizon has been cutting vital staff — it has nearly 40 percent fewer workers now than a decade ago. Verizon has failed to hire the personnel necessary to properly roll out FiOS, the high-speed broadband service that is still unavailable to many of its customers. In cities like Philadelphia and New York, Verizon has failed to meet the buildout obligations under their citywide cable franchise agreements.

“Verizon wants to force through changes that would make it easier to uproot workers and hurt our communities,” said Betsy Derr, a customer service representative and CWA member in Bloomsburg, Pa., who’s worked at Verizon for over 16 years. “My job could be relocated about 70 miles away.  With three more hours of time commuting every day, I’ll be gone before my stepsons get up and maybe home for an hour before they go to bed.”

New TV Calls Verizon “The Poster Child Of Corporate Greed”

With contract negotiations for 39,000 workers stalled, Verizon Workers Blast Company’s Corporate Greed in new TV ad.

Verizon workers call company “the poster child of corporate greed”

as they prepare to go on strike, if necessary

NEW YORK — Frustrated with the unproductive pace of negotiations towards a new contract for 39,000 Verizon workers from Massachusetts to Virginia, the Communications Workers of America has launched a regional TV and digital ad buy calling the nation’s 16th largest company “the poster child for corporate greed.”  The ad can be viewed here: http://standuptoverizon.com/poster-child/. 

Verizon made $1.5 billion a month in profits in 2015—and $39 billion in profits over the last three years—while insisting at the bargaining table that workers accept major cutbacks in health care coverage, job security, pension protections, and benefits for injured workers.  Verizon also adamantly refuses to bargain a fair first contract for wireless retail store workers in NY and Massachusetts.  Continued management intransigence on these issues, which has left workers without a contract since August 1st of 2015, could lead to a strike that would affect consumers from Massachusetts to Virginia.  

In the new advertisement, which will start running this weekend, retired Verizon worker Ernie Hammel – 29-year former field technician – tells customers, “This company is the poster child for corporate greed.” 

Following clips of national TV reports about growing economic inequality in the country, the advertisement shows that Verizon’s CEO makes more than 200 times as much as the company’s average worker.

“For a communications company, Verizon executives seem to have trouble hearing their customers and their workers,” said Dennis Trainor, Vice President for CWA District One, which covers Verizon workers from New Jersey to Massachusetts.  “A company this profitable should not be making the wealth gap in America even worse by cutting benefits and destroying job security, while a handful of executives line their pockets with $50 million a year in compensation.” 

“Americans are outraged by what the corporate elite has done to working people in this country over the last 30 years,” said Ed Mooney, Vice President for CWA District 2-13, which covers the workforce from Pennsylvania to Virginia.  “And Verizon typifies everything that people in this country are angry about.  If we have to walk, Verizon will be a national target for anger at corporate greed.”

Verizon workers, represented by the Communications Workers of America (CWA) and International Brotherhood of Electrical Workers (IBEW), have been working without a contract since August and are growing increasingly frustrated that the company is still attempting to make devastating changes, including: 

  • Eliminating job security and allowing the company to force transfer workers anywhere in the company’s footprint, away from their families, for up to two months at a time.
  • Refusing to negotiate a fair first contract for 100 Verizon Wireless workers who organized into CWA in 2014.  No raises, no benefit increases, no improvements to working conditions.
  • Freezing pension accruals at 30 years of service.
  • Vastly expanding contracting out and offshoring of union jobs. This comes on top of Verizon’s outsourcing of thousands of call center jobs to Mexico, the Philippines and other overseas locations in recent years.
  • Gutting the Family Leave Care plan, which provides paid leave to care for sick family members or care for a newborn.
  • Gutting the Sickness and Accident Disability Plan, which provides benefits to workers injured on the job.
  • And continuing their oppressive, bullying tactics of harassment and intimidation every day on the job.

“Verizon workers are the backbone of this company, and executives have lost sight of what makes this company so profitable,” said national CWA President Chris Shelton.  “Verizon workers have helped executives pocket $249 million in the last five years while their own families are worrying about job security.  We’re all tired of waiting for Verizon executives to agree to a fair contract.  It’s time to let customers know what is going on, and why we’ll be on strike if the situation doesn’t change soon.” 

Verizon is falling short on commitments to its customers as well. The company refuses to build out FiOS in many underserved communities up and down the East Coast, and has abandoned upkeep of the traditional landline network, leading to extensive service problems for consumers.  Even in New York City, where Verizon pledged to make FiOS available to every customer by the end of 2014, the City’s Department of Information Technology and Telecommunications issued a report finding that the company was evading the buildout commitments it made under its 2008 video franchise agreement.

In a strike vote conducted last summer, 86% of Verizon workers supported walking off the job if a fair agreement could not be reached.

IBEW Applauds DNC Decision to Drop WMUR Sponsorship of Next Debate

IBEW leaders are applauding the decision of the Democratic National Committee and the New Hampshire Democratic Party to drop television station WMUR as a co-sponsor of the next Democratic presidential debate scheduled for December 19. 

“The right to collectively bargain has been a key part of every Democratic Party platform for more than a half a century,” said IBEW International President Lonnie R. Stephenson.   “WMUR management’s refusal to meet in good faith with its employees stands in gross violation of that principle so I’m pleased that DNC chair Rep. Debbie Wasserman Schultz and N.H. Democratic Party Chair Ray Buckley have taken this step.”

Nearly two dozen members of IBEW Local 1228 have been resisting efforts to strip them of their retirement benefits. Management has ignored the union’s request for negotiations.

All three Democratic candidates – Hillary Clinton, Martin O’Malley and Bernie Sanders – have called on WMUR, which is owned by Hearst Media, to hold negotiations before the scheduled debate.

“We’re grateful for the support we’ve gotten from the DNC and from the candidates themselves,” said Local 1228 Business Manager Fletcher Fischer. “We hope this puts us one step further towards a fair resolution of the issue.”

WMUR Union Workers To Picket Arrival Of Senator Bernie Sanders At WMUR Studios, Tomorrow

Fair Contract With WMUR

IBEW Local 1228 members at the NH Democratic Party’s JJ Dinner last Sunday

Sen. Bernie Sanders is considered by many to be the true “labor supporter” among the Presidential primary candidates. Sen Bernie Sanders walked the picket line with workers in Iowa.  Last year, he joined FairPoint workers on the picket line during their months long strike.

WMUR Channel 9 studio staff Directors and Production Technicians formed a union to improve their wages and working conditions at the Hearst Corporation owned station. The Station is demanding these 22 workers lose their pension simply because they formed a union. There are already 12 other WMUR employees in a Hearst Union Pension Plan that these workers could be moved into, but WMUR and Hearst refuses. They insist on taking away the pensions of the people who put on their daily news shows every day of the year, some of them working for the station for 20 years or more.

In early November, Sanders sent a letter to Jeff Bartlett, President and General Manager of WMUR-TV, hinting that failure to reach an agreement with the IBEW local that represents WMUR production staff could be detrimental to the Presidential Debate that WMUR is sponsoring on December 19th.

IBEWLocal1228--WMUR--PressRelease--20151130

In the press release touting Sanders support the IBEW local 1228 stated:

“The Union is in talks with the Democratic National Committee to alert them to both the pension situation and the candidates’ positions of support. The Union is asking for the candidates and the Democratic Party to intervene with ABC to remove WMUR from sponsoring or having any other involvement with the debate, including pre and post-debate interviews.”

Considering that the debate is only two-weeks from Saturday, would this be considered a pre-debate interview?

Tonight the facebook page “Fair Contract with WMUR,” a page created by the WMUR union members, announced that they plan to picket the arrival of Senator Sanders for his “Political Up Close” interview.

Members of the IBEW Local 1228 will be picketing, at the arrival of Senator Bernie Sanders at WMUR-TV for the taping of Political Close Up. Tomorrow December 4th starting at 8:15 am, please join your brothers and sisters in their fight against Hearst Corporation and WMUR TV.”

What will Senator Sanders do?  Will he show up, meet with picketers and then refuse to be interviewed by WMUR until the station resolves this contract dispute?

Be at the WMUR-TV Broadcast Center, 100 South Commercial Street, at 8:15 on December 4, 2015, to see exactly what Senator Sanders will do.  


UPDATE: Click Here to read the follow up story on Senator Sanders meeting with IBEW members and working to bring both parties together

APWU 230 and IBEW 2320 Endorse Colin Van Ostern For Governor

50 NH State Representatives, 2 Local Labor Unions Endorse Colin Van Ostern for Governor

 Today 50 New Hampshire State Representative and two local labor unions announced their support of Colin Van Ostern for Governor of New Hampshire, building the campaign’s grassroots momentum after more than 500 community & business leaders endorsed Van Ostern in October.

“It’s absolutely critical that the people of New Hampshire have a Governor who is fighting every day for the people of our state – and for an economy that works for all of us, not just those at the top,” said Colin Van Ostern. “Building a brighter future for the people of New Hampshire and winning in 2016 will take a strong grassroots team and people-powered campaign, and I’m proud that’s what we are building.”

This week the executive boards of the International Brotherhood of Electrical Workers local 2320 and American Postal Workers Union local 230 both voted to endorse Colin Van Ostern for Governor, throwing the weight of their 1,000+ members behind his campaign.

Additionally, fifty New Hampshire State Representatives have now joined in support of the campaign. View the list here: http://vanostern.com/nh-legislators-for-colin-van-ostern/

Colin Van Ostern is a New Hampshire business leader, education innovator, dad, and Executive Councilor running for Governor in 2016.  He lives in Concord with his wife Kristyn, two sons, and black lab.  Learn more at www.vanostern.com

CWA Petitions Pennsylvania Public Utility Commission to Investigate, Fine Verizon for Appallingly Dangerous Conditions

p 13 top left Chester Co Honeybrook Rte 10 & Woodland

Image courtesy of CWA

 Verizon’s Systemic Neglect of Telephone Infrastructure Leads to Broken Poles, Sagging Cables, Ungrounded Conduit, and Abandoned Equipment That Pose Hazards to Public Safety

PUC Has Received Thousands of Complaints of Inadequate Service; Customers Unable to Receive Medical Calls, Call 911 

WASHINGTON- The Communications Workers of America (CWA) today filed a petition with the Pennsylvania Public Utility Commission calling on the PUC to open an investigation into unsafe conditions at Verizon locations throughout the state. 

Image courtesy of CWA

CWA, in the course of representing its almost 5,000 Verizon workers throughout Pennsylvania, examined Verizon’s equipment in areas of the state where Verizon has not built its new fiber network (or FiOS) and only offers service through traditional copper wiring.  The investigation documented hundreds of dangerous locations that include poles designated for removal that are not stable (and in some cases broken), portions of old poles suspended in the air, terminals and other equipment not attached to poles, cables hanging dangerously low due to broken lashings that have not been replaced, plastic coverings and splice boxes placed over damaged cable and other equipment that pose a risk of insect and animal infestation and that are not properly grounded, damaged cabinets that pose a risk of insect and animal infestation, and similar conditions that pose a risk to CWA members and the public.

“Everyday, CWA members put themselves at risk climbing poles that can fall at any minute or fixing equipment that has become a home for rats and other dangerous infestations due to Verizon’s unwillingness to maintain its, equipment,” said CWA District 2-13 Vice President Ed Mooney. “Despite a billion dollars in profits every month, Verizon refuses to spend the money necessary to keep the public and its employees safe. Customers are paying every month for telephone service that’s reliable. They deserve better than this.”  

Image courtesty of CWA

Image courtesy of CWA

“AARP supports the call for an investigation of Verizon’s operations in Pennsylvania. We know that telephone service is a basic necessity, allowing older people to maintain social contact, preserve health and safety, and call for assistance in an emergency,” said Bill Johnston-Walsh, AARP Pennsylvania State Director.  “Many consumers rely on their landline service during extreme weather or other emergencies.  When the power goes out, they need to be able to communicate. AARP also encourages consumers to take advantage of advanced technologies. The Commission’s should use its investigation to ensure that Pennsylvania consumers enjoy the finest, affordable, universal, reliable and high quality telecommunications system in the nation.”

In its investigation so far, the union documented more than 200 examples in 13 counties where Verizon is failing to provide safe facilities by refusing to 1) replace damaged, bent, and broken poles; 2) repair or replace damaged cross-connect boxes and remote terminals; 3) repair or replace damaged cable; and 4) properly control falling trees and vegetation near its facilities.  The union is calling on the PUC to use its authority to conduct a public, on-the-record investigation into whether Verizon is meeting its statutory obligation to provide “adequate, efficient, safe, and reasonable service and facilities.”

Image courtesy of CWA

Image courtesy of CWA

Since 2012, the PUC has received more than 6,000 complaints of inadequate service.  Because the PUC often transfers customers to Verizon before taking a complaint, the real number of complaints is even higher.  Many of these complaints document multiple days without service over several months, and have led to missed medical calls and an inability to call 911 in emergencies.

The union says that the dangerous conditions are due to Verizon’s systemic underinvestment in its traditional landline network.   In July, Verizon admitted in a letter to the FCC that it had only spent $200 million over the last seven years to maintain its copper landline network in Pennsylvania, ten other states and the District of Columbia.  CWA also asked the PUC to order Verizon to take immediate actions to correct these dangerous conditions throughout the Commonwealth, and to fine Verizon for what appear to be willful failures to safely maintain its equipment.  According to CWA’s petition, the PUC has the authority to fine Verizon up to $1,000 per day for each safety violation.

Letter To Editor: Unions Should Push To Bury Northern Pass Lines

letters to the editor

I am puzzled by the IBEW’s and other labor unions’ support for above-ground transmission lines on the Northern Pass project. I urge labor to reconsider its positon and advocate for full burial of the transmission line because full burial is in the best interests of labor.

I have a Ph.D. in history and specialize in labor and legal history. My grandfather and father were both members of the Boston Pipefitters union, and I am currently a union member. I was also a union organizer in Boston in the 1970s. I view things from a labor perspective and care about the interests of workers.

I support full burial of the Northern Pass transmission line because, among many reasons, it is the best alternative for workers and New Hampshire. In the draft Northern Pass Transmission Project Environmental Impact Statement, the Department of Energy found that burial of the entire transmission line pursuant to Alternative 4a will create nearly twice as many annual construction jobs over three years and 65% more permanent full-time jobs, will have almost double the economic impact from construction and 61% more in total economic impacts, and will generate 97% more statewide annual property tax revenues than the proposed above-ground line under Alternative 2 (DEIS, 4-5, 4-6). The adjustments that Northern Pass has made to Alternative 2 by increasing the amount of line buried will not significantly alter the above numbers and still fall far short of the economic advantages of 4a. From a labor and economic perspective, full burial is the best option for union and non-union workers alike.

It is my hope that labor will look closely at the advantages of 4a and insist that Northern Pass bury the entire transmission line.

Linda Upham-Bornstein,
Lancaster, NH 

Buying (and Selling) the Future on Wall Street

Verizon as a case study of why our economy doesn’t work, part six

The “ah-ha!” moment came during a conversation with a friend. What we realized: the way we usually talk about the stock market doesn’t match the reality of our modern economy. Things we assume about stock ownership often aren’t really true.

NYSE_09_26_1963_US_News_World_Report

New York Stock Exchange, 1963 (Photo by US News and World Report via Library of Congress)

Start with the basics: what is a share of stock? Most of us think “Investors give a business money and get back shares of stock that give them a fractional ownership of the company.”

But try applying that concept to Verizon, and it doesn’t fit. Verizon stockholders buy and sell shares on the open market – and none of that money goes back to the corporation. The money that investors pay when they buy stock… goes to the investors who sold the stock.

So buying stock isn’t “an investment in the company”… it’s an investment in the stock itself. If you later sell that stock for more than you paid for it, that profit is what’s known as a “capital gain.” If you sell it for less than you paid for it, that’s a “capital loss.”

Stock ownership does give shareholders a “fractional ownership of the company.” But what does that mean? There are more than 4 billion shares of Verizon stock outstanding.  If you own one of those shares, you don’t have rights to any particular network router or mile of transmission line.  Instead, you own slightly less than one-four-billionth of the corporation’s “stockholder’s equity.”  That means if the corporation were to be liquidated tomorrow, you – along with all the other stockholders – would share whatever remained after the corporation’s assets were sold and its other debts were paid.

And that’s probably when, if you were a stockholder, you would start remembering the $49 billion in long-term debt that Verizon acquired in 2013.

And that’s probably when you’d realize that Verizon’s corporate balance sheet shows less than $12.3 billion in “total stockholder equity.” And there are more than 4 billion shares of stock outstanding.

Which means each share of stock represents less than $3 in stockholder equity.

VZ stock chart

Verizon Share Price

Verizon has been trading above $40 a share since… April Fool’s Day 2012. (Back when there were less than 3 billion shares outstanding and the balance sheet showed stockholder’s equity of about $11.76 per share.)

That’s a huge difference between the per-share value of stockholder equity and the per-share price stockholders have been paying… for years now.

So… what else are stockholders buying? (in addition to that minuscule percentage of a relatively small amount of stockholder equity)

Each share also confers the right to receive a dividend, when and if the corporation issues dividends.  And – no surprise – Verizon has been issuing steadily-increasing dividends for more than a decade.  At this point, it’s issuing dividends that total more than $2.20 a year.  With shares trading between $40 and $45, that means stock purchasers can expect to make back – in dividends – about 5% a year on their investment. Which is way more than the rest of us can get in bank interest right now, if we put money into a savings account.

But although those dividends represent a whopping big “return on investment” – there’s still the risk that you could lose money on the stock itself.  Think about it: if you bought a share of Verizon stock last October, you paid about $49 a share. Since then, you’ve received about $2.20 in dividends. But the price of each share of stock has dropped to about $44. So even though you’ve received 5% in dividends… if you sold the stock now, you would still have “lost” about $2.80 per share.

So corporate executives pay a whole lot of attention to share prices.

VZ_Exec_Comp_Program_from_ProxyFor two reasons. First, because executives’ compensation is largely “pay for performance.” For Verizon executives, 90% of compensation is “incentive-based pay.” And what’s the objective? “Align executives’ and shareholders’ interests.”

Second reason: because most corporate executives own a lot of stock in their company.

VERIZON SHARES OWNED by executivesAs of this past February, when stock incentives were awarded, Verizon’s top 10 executives reported owning a total of more than 645,000 shares of corporate stock – worth, at the time, $49.31 per share… or, more than $31.8 million.

But Verizon stock is now trading at about $44 per share. That means those same executives’ shares are now worth only about $28.4 million.

So is it really a surprise that corporations spend trillions of dollars buying back their own stock, to bump up share prices?  Is it really a surprise that corporations borrow money to pay dividends and fund buybacks?

I don’t see anything here that provides an incentive for corporate executives to grow a company long-term.  Nothing that provides an incentive to pay employees a fair wage.  Nothing that provides any incentive to “create jobs” (no matter how low the tax rate goes).

The only incentives are: to keep stock prices high and to pay dividends. (And an incentive for corporate executives to take as much money as they can, however they can, while it’s still available.)

And so for the rest of us, the economy doesn’t work.

— — — — —

retirement eggWondering why you should find time to care about this, with everything else that’s going on right now?

Because of that huge difference between the per-share value of shareholder’s equity and the actual price per share.

And what happens during recessions.

And the fact that almost everybody’s retirement money is – in one way or another – invested in the stock market.

Here in the Granite State, the NH Retirement System lost 25% of its value in the last recession.

In June 2007, before the Wall Street meltdown, the NHRS had $5.9 billion in investments, including
•  $29.7 million of stock in Citigroup, Inc.
•  $23.5 million of stock in American International Group, Inc. (AIG)
•  $14.0 million of bonds issued by Federal Home Loan Mortgage Corp. (Freddie Mac)
•  $13 million of bonds issued by Federal National Mortgage Association (Fannie Mae)

Two years later, when the recession was in full force,
•  Citigroup stock had plunged to only about 6% of its former value
•  AIG stock was worth only about a penny on the dollar and
•  Freddie Mac and Fannie Mae had both been placed into federal conservatorship

That’s what happens to stock values, during recessions.

Remember hearing about the Detroit bankruptcy? Which supposedly was triggered by unsustainable public employee pension costs? The Detroit pension systems were fully funded, as of June 2008. Then the recession hit.

All those defined-contribution 401(k)s? Across the country, families lost an estimated $2 trillion (with a T) of their retirement savings when stock values plummeted during the last recession.

Artificially-high stock prices hurt almost everybody, in the long run.

— — — — —

Yes, there’s more.

Smashed Piggy Bank RetirementVerizon’s balance sheet includes $24.6 billion of “goodwill” and $81 billion of “intangible assets.” And if you factor those out, Verizon has “net tangible assets” of minus $93.4 billion. That’s what most of us would think of as a negative net worth… of about minus $23.35 per share. While investors are paying about $44 per share to buy the stock.

The good news, from the investors’ perspective: they’re not personally liable for that $116 billion in long-term corporate debt. If – and this is purely hypothetical – if Verizon were to declare bankruptcy and default on that debt, stockholders would not be expected to pitch in $23.35 per share to satisfy the corporations’ creditors.

The bad news is, somebody out there would take that loss… and retirement systems across America invest in corporate bonds. (At last report, the NH Retirement System owned more than $433 million worth of corporate bonds.  Can’t tell, from here, whether any of those include Verizon.)

— — — — —

Photo by Stand Up to Verizon via Flickr

Photo by Stand Up to Verizon via Flickr

If you want to support the 39,000 Verizon employees who have been working without a union contract since August 1st, you can sign the petition here.

Stand Up to Verizon is on Facebook here.

Part one of this “Verizon as a case study” series is here.  It focuses on Verizon’s $5 billion stock buyback last February, and the short-term bump in stock prices which followed.

Part two of the series, showing how Verizon executives benefited from that $5 billion buyback, is here.

Part three, looking at the disconnect between Verizon’s reported profits and the dividends it pays its stockholders, is here.

Part four, about phantom stock and how Verizon executives are avoiding taxes by investing in imaginary assets, is here.

Part five, about how Verizon is borrowing money to pay stockholders and executives while demanding givebacks from unions, is here.

This is part six.  And yes, there will be more.

Verizon Borrows Money To Pay Stockholders And Executives While Demanding Givebacks From Unions

Verizon as a case study of what’s wrong with our economy, part 5

Photo by Stand Up to Verizon via Flickr

Photo by Stand Up to Verizon via Flickr

It’s a math problem, instantly recognizable by anybody who’s tried to balance a family budget lately.

But it’s also a morality problem.

Here’s the thing:

  1. Verizon reports annual income of $54,287 per employee. BUT
  2. This past February, Verizon indulged in a stock buyback equal to about $28,000 per employee. AND
  3. Verizon continues to pay out, in annual dividends to stockholders, more than $50,000 per employee.

Between buybacks and dividends, there’s a lot more money being “distributed to stockholders” than the company reports as income. That’s the math problem.

Which is depressingly reminiscent of the business practices of the private equity industry, documented back in 2012. “Bain, and some other private equity companies …had companies paying dividends using borrowed money, not profits.” (Read “What Mitt Romney Taught Us about America’s Economy” here.)

And Verizon has accumulated a substantial amount of debt, along the way. Right now, the corporation has long-term debt equal to about $655,000 per employee. And its Morningstar credit rating is only BBB (“moderate default risk”).

But the dividends it pays out to shareholders keep ratcheting higher… always higher. (And yes, Verizon CEO Lowell McAdam is a substantial shareholder, getting dividends worth more than a half-million dollars a year.)

Instead of cutting dividends to grow the business, Verizon has borrowed money – putting itself in debt at least through 2055.

Just this month, the corporation announced another increase in the dividend rate. While the corporation’s employees were working without a contract. Because Verizon wants givebacks from its employee unions.

Again: Verizon is increasing the amount of money paid to shareholders at the very same time it is insisting on employee givebacks.

Yes, there’s a morality problem here.

———-

Anybody else see the Brookings study, earlier this week, “Would a significant increase in the top income tax rate substantially alter income inequality?”

As I see it, the researchers totally missed the point.

When you’re talking about the macroeconomic effects of tax rates, the big effect has nothing to do with the amount of revenue produced.

Instead, policymakers (and researchers) need to focus on how various tax rates influence decisions made on the micro level.

Anyone who lived through the Eisenhower era of 90% tax rates knows that CEOs make very different decisions when 90% of their income is going to the federal government. (For instance, they’re not anywhere near as likely to borrow money to pay themselves a stock dividend, if 90% of that dividend is going to the federal government.)

———-

If you want to support the 39,000 Verizon employees who have been working without a union contract since August 1st, you can sign the petition here.

Stand Up to Verizon is on Facebook here.

Part one of this “Verizon as a case study” series is here.  It focuses on Verizon’s $5 billion stock buyback last February, and the short-term bump in stock prices which  followed.

Part two of the series, showing how Verizon executives benefited from the $5 billion buyback, is here.

Part three, looking at the disconnect between Verizon’s reported profits and the dividends it pays its stockholders, is here.

Part four, about phantom stock and how Verizon executives are avoiding taxes by investing in imaginary assets, is here.

This is part five.

Part six calculates that — because of all the dividends and long-term borrowing — each share of Verizon stock now represents less than $3 in stockholder equity (even while it’s trading at more than $40 a share); read it here.

And yes, there will be more in the series.  Please check back.

How Do CEOs Make Millions When The Company Goes Belly Up? Investing In Imaginary Assets

Verizon as a case study of what’s wrong with our economy, part 4

Enron play London

Photo by Tilemahos Efthimiadis via Wikimedia Commons


Remember Enron?

Remember when George Bush selected Enron executive Thomas White to be Secretary of the Army? Remember how, when he left Enron, White received a $13 million payment for “phantom stock”?

That was early in the biggest corporate meltdown in history (at the time).  And when analysts tried to reconstruct what went wrong, Enron’s “phantom stock” program was part of the explanation.  “According to documents provided by Enron to the IRS, in 2000, approximately 1,673 employees participated in the program.” “Enron’s SEC filings reveal that some payouts under the phantom stock plan were huge.”

Wondering what “phantom stock” is?

Well… it actually isn’t. Because it’s imaginary. It doesn’t exist.  In the terminology of Verizon’s “Executive Deferral Plan”… it’s just “hypothetical.”

Ah yes… as I was researching this series, I stumbled over traces of Verizon’s phantom stock.

For instance, according to SEC filings, Verizon Director Richard L. Carrion “owns” more than 98,500 shares of Verizon’s phantom stock. “Each share of phantom stock is the economic equivalent of one share of common stock and is settled in cash. The shares of phantom stock become payable following the reporting person’s termination of service as a director.” As of last week, Carrion’s phantom shares were “worth” more than $4.3 million. Which, under a 2004 tax law, apparently isn’t subject to taxation until the money is actually paid to Carrion. After “termination of [his] service as a director.”

And apparently, until the money’s paid out, Verizon’s phantom shares remain so hypothetical that not only are they not taxed

…but I couldn’t find any accounting for them, as a long-term corporate liability, in either Verizon’s 2014 Annual Report or its 2015 proxy statement.

Hopefully, I just missed it. Hopefully, the shareholders have some way of knowing exactly how much “economic equivalent” is out there as a standing liability for future payment.  Because when I added up all of the directors’ phantom stock I could find in the SEC filings, it totaled more than 400,000 shares — which would be worth more than $18 million at last week’s stock prices.

And Verizon doles out lots of phantom stock – not just to directors, but also to Verizon employees.

For instance, Verizon CEO Lowell McAdam. According to SEC filings, McAdam “owns” more than 278,900 phantom shares of Verizon stock. What’s that worth? I have no idea.  According to the filings, the phantom stock McAdam “owns” is the economic equivalent of only “a portion” of the corresponding shares of Verizon stock. How big a “portion”? I have no idea. I couldn’t find that anywhere, either.

VZ phantom stock - employee officersBased on what I could find, 10 Verizon employees who report their ownership to the SEC together “own” more than 1.5 million phantom shares. All reported as “deferred compensation” – payable in the future – but I couldn’t find any record of how much Verizon’s total long-term liability is, for all these “hypothetical” shares.

I couldn’t even find out how many people “own” phantom stock through Verizon’s “Executive Deferral Plan.” Although “a company’s officers and directors” are required to file ownership disclosures with the SEC, other top- and mid-level executives aren’t required to do so. (And remember, Enron reportedly had about 1,673 executives in its phantom stock program.)

And it gets worse.

That Executive Deferral Plan (EDP) also offers “a ‘Moody’s’ investment fund that provides a return that mirrors the yield on certain long-term, high-grade corporate bonds.” (page 8)   But again, this isn’t an actual investment in an actual investment fund.  No, remember, this Plan “is not funded and has no trust or assets to secure your benefits.” (page 17) Because, Verizon tells its executives, “If the EDP were funded by a trust, you would be subject to immediate income tax on your vested Plan benefits.” (also page 17)

Instead, this Plan seems to be just a bookkeeping mechanism. The Plan summary explicitly says: “the investments referred to in the Plan are hypothetical in nature… the Plan administrator will track the performance of the investments that correspond to the hypothetical investments in your EDP account, and the value [of] your EDP account will be adjusted to reflect the gains (and losses) of the investments corresponding to the hypothetical investments in your account.” (also page 17)

But I couldn’t find out how much money – total – is hypothetically “invested” in this hypothetical “Moody’s” fund. I couldn’t find out how many executives participate. So what’s the long-term liability to Verizon’s bottom line?

And it gets worse. There are apparently still other hypothetical investment options. From the Plan Summary: “[Y]ou can elect to have your EDP account treated as if it were invested in any of the hypothetical investment options that mirror the performance of the investment options that are available under the Verizon Savings Plan for Management Employees or the Verizon Business Savings Plan for Management Employees, whichever applies to you.”

But the bottom line liability? How much is owed to Verizon executives under this Plan? I couldn’t find it. Anywhere.  (If you can find it, please leave me a note in the comments!)

Remember that one Enron executive, Thomas White, received $13 million for his phantom stock… and there were 1,670 other enrollees in that company’s program.

Now… I’m not trying to draw an analogy between Enron and Verizon. But the “phantom stock” thing really caught my attention.

And it makes me uncomfortable that Verizon – which has about 178,000 working families depending on it for paychecks – is run by executives who are willing to put millions of dollars of their own money into “hypothetical” investments…

…just to delay taxation on I can’t tell how much executive compensation…

…at the same time Verizon is insisting on concessions from its employee unions.

And it’s not just Verizon. It’s corporations throughout our economy.

Big bucks to executives (who are using all kinds of imaginative ways to avoid taxation)… while working families are expected to give money back, to improve the corporate bottom line.

It’s why our economy isn’t working, for anybody but the folks at the very, very top.

—————

If you want to support the 39,000 Verizon employees who have been working without a union contract since August 1st, you can sign the petition here.

Stand Up to Verizon is on Facebook here.

Part one of this “Verizon as a case study” series is here.  It focuses on Verizon’s $5 billion stock buyback last February, and the short-term bump in stock prices which  followed.

Part two of the series, showing how Verizon executives benefited from the $5 billion buyback, is here.

Part three of the series, looking at the disconnect between Verizon’s reported profits and the dividends it pays its stockholders, is here.

This part four.

Part five, about how Verizon is borrowing money to pay stockholders and executives while demanding givebacks from unions, is here.

Part six calculates that — because of all the dividends and long-term borrowing — each share of Verizon stock now represents less than $3 in stockholder equity (even while it’s trading at more than $40 a share); read it here.

And yes, there will be more in the series.  Please check back.

Read more about how US tax policy encourages profit-taking — even profit-taking that bankrupts corporations — in “What Mitt Romney Taught Us about America’s Economy” here.

 

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