EXHIBIT 10j(vi)
VERIZON COMMUNICATIONS INC.
LONG-TERM INCENTIVE PLAN
PERFORMANCE STOCK UNIT
AGREEMENT
2006–08 AWARD
CYCLE
AGREEMENT between Verizon Communications Inc.
(“Verizon” or the “Company”) and you (the
“Participant”) and your heirs and
beneficiaries.
1. Purpose of Agreement. The purpose of this Agreement is to provide a
grant of performance stock units (“PSUs”) to the
Participant.
2. Agreement. This Agreement is entered into pursuant to the
terms of the 2001 Verizon Communications Inc. Long-Term Incentive
Plan (the “Plan”), and evidences the grant of a
performance stock award in the form of PSUs pursuant to the Plan.
This Agreement is intended to comply with the requirements of
Section 162(m) of the Code and the Treasury Department
Regulations thereunder. The PSUs and this Agreement (including the
covenants set forth in Exhibit A (the “Covenants”),
which are incorporated into and shall be a part of the Agreement)
are subject to the terms and provisions of the Plan. By executing
this Agreement, the Participant agrees to be bound by the terms and
provisions of the Plan, this Agreement and by the actions of the
Human Resources Committee of Verizon Communication’s Board of
Directors or any successor thereto (the “Committee”),
and any designee of the Committee. To the extent that there is a
conflict between the terms of the Plan and the terms of this
Agreement, the terms of this Agreement shall control.
3. Contingency. The grant of PSUs is contingent on the
Participant’s timely acceptance of this Agreement and
satisfaction of the other conditions contained herein. If the
Participant does not properly accept (or revokes acceptance of)
this Agreement the Participant shall not be entitled to the PSUs
regardless of the extent to which the vesting requirements in
paragraph 5 (“Vesting”) are satisfied.
4. Number of Units. The Participant is granted the number of PSUs as
specified on their account under the 2006 PSU grant, administered
by Fidelity Investments. A PSU is a hypothetical share of
Verizon’s common stock. The value of a PSU on any given date
shall be equal to the closing price of Verizon’s common stock
on the New York Stock Exchange as of such date. A PSU does not
represent an equity interest in Verizon and carries no voting
rights. A Dividend Equivalent Unit (“DEU”) or fraction
thereof shall be added to each PSU each time that a dividend is
paid on Verizon’s common stock. The amount of each DEU shall
be equal to the dividend paid on a share of Verizon’s common
stock. The DEU shall be converted into PSUs or fractions thereof
based upon the average of the high and low sales prices of
Verizon’s common stock traded on the New York Stock Exchange
on the dividend payment date of each declared dividend on
Verizon’s common stock, and such PSUs or fractions thereof
shall be added to the Participant’s PSU balance. To the
extent that Fidelity or the Company makes an administrative error
with respect to the number or value of the PSUs granted to the
Participant under this Agreement, the Company specifically reserves
the right to correct such error and the Participant agrees that he
or she shall be legally bound by any corrective action taken by the
Company or the Plan Administrator.
5. Vesting.
(a) General.
The Participant shall vest in the
PSUs to the extent provided in paragraph 5(b) (“Performance
Requirement”) only if the Participant satisfies the
requirements of paragraph 5(c) (“Three-Year Continuous
Employment Requirement”), except as otherwise provided in
paragraph 7 (“Early Cancellation/Accelerated Vesting of
PSUs”).
(b) Performance
Requirement.
(1) General. The PSUs
shall vest based on the average annual total shareholder return
(“TSR”) of Verizon’s common stock during the
three-year period beginning January 1, 2006, and ending at the
close of business on December 31, 2008 (the “Award
Cycle”), relative to the combined weighted average annual TSR
of the companies in the Standard & Poor’s 500
(“S&P 500 ® ”) Index and the companies in
the Industry Peer Company (“IPC”) Index during the same
three-year period. No PSUs shall vest unless the Committee
determines that certain threshold performance requirements have
been satisfied. The formula for determining the total number of
PSUs that may vest and become payable (the “Payout
Formula”) will equal the number of units that you are granted
as described in paragraph 4 (plus any additional PSUs added with
respect to DEUs credited over the Award Cycle) times the
Total Vested Percentage (as defined below). For example, if
(a) you are granted 1,000 PSUs, and (b) those PSUs are
credited with an additional 150 PSUs as a result of DEUs paid over
the Award Cycle, and (c) the Total Vested Percentage is 96%,
you will generally vest in (1,000 PSUs + 150 PSUs from DEUs)
times 96%, or 1,104 PSUs, which shall be payable in cash as
described in paragraph 6. Please note that the Committee retains
the discretion to determine the Total Vested Percentage, the
Verizon S&P 500 Vested Percentage, the Verizon IPC Vested
Percentage and the extent to which you are eligible to receive DEUs
with respect to dividends declared after your separation from
employment pursuant to paragraph 7(b)(1), and the Committee’s
exercise of this discretion shall be final, conclusive and
binding.
(2) Definitions. For
purposes of the performance requirement and Payout Formula set
forth in paragraph 5(b)(1)—
(i) “Total Vested
Percentage” shall be equal to (i) 40% of the
average annual Verizon S&P 500 Vested Percentage during the
Award Cycle, plus (ii) 60% of the average annual
Verizon IPC Vested Percentage during the Award Cycle.
(ii) “Verizon S&P 500
Vested Percentage” shall be an amount (between 0% and 200%),
as determined by the Committee, for each year in the Award Cycle as
provided in the following table:
|
|
|
|
|
Verizon S&P 500 TSR
Position
|
|
Verizon S&P 500
Vested Percentage
|
|
Below 20%
|
|
0%
|
|
At least 20% but less than
80%
|
|
2 Times the Verizon S&P 500 TSR
Position
|
|
80% or more
|
|
200%
|
(iii) “Verizon S&P 500 TSR
Position” shall be, as determined by the Committee,
Verizon’s rank among companies in the S&P 500 Index in
terms of TSR, expressed as a percentage equal to the number of
companies in the S&P 500 Index (including Verizon) with a TSR
less than or equal to that of Verizon divided by the total number
of companies in such index. The Committee retains the discretion to
determine the Verizon S&P 500 TSR Position for any period, and
the Committee’s exercise of this discretion shall be final,
conclusive and binding.
(iv) “Verizon IPC Vested
Percentage” shall be an amount (between 0% and 200%), as
determined by the Committee, for each year in the Award Cycle as
provided in the following table:
|
|
|
|
|
Verizon IPC TSR
Position
|
|
Verizon IPC Vested
Percentage
|
|
Below 20%
|
|
0%
|
|
At least 20% but less than
55%
|
|
1.5 times the Verizon IPC TSR
Position
|
|
55%
|
|
100%
|
|
More than 55%
|
|
2 times the Verizon IPC TSR
Position
|
(v) “Verizon IPC TSR
Position” shall be, as determined by the Committee, where
Verizon would rank among companies in an Industry Peer Company
Index in terms of TSR if Verizon were included in such index,
expressed as a percentage equal to the number of companies in the
IPC Index (including Verizon) with a TSR less than or equal to that
of Verizon divided by the total number of companies in such index.
The Committee retains the discretion to substitute, add or
eliminate companies in the Industry Peer Company Index and to
determine the Verizon IPC TSR Position for any period, and the
Committee’s exercise of this discretion shall be final,
conclusive and binding.
(vi) “TSR” or
“Total Shareholder Return” shall mean the change in the
price of a share of common stock from the beginning of a period (as
measured by the closing price of a share of such stock on the last
trading day preceding the beginning of the period) until the end of
such period (the “Measurement Period”)(as measured by
the closing price of a share of such stock on the last trading day
of the period), adjusted to reflect the reinvestment of dividends
(if any) through the purchase of common stock and as may be
necessary to take into account stock splits or other events similar
to those described in Section 4.3 of the Plan. Measurement
Periods may vary between and/or during an Award Cycle, and may or
may not be coextensive with the Award Cycle. The Committee retains
the discretion to determine and to change the Measurement Periods
which shall be used to calculate TSRs for the Award Cycle, both
before and during the Award Cycle, and the Committee’s
exercise of this discretion shall be final, conclusive and
binding.
(c) Three-Year Continuous
Employment Requirement. Except as otherwise determined by the Committee,
or except as otherwise provided in paragraph 7(b), the PSUs shall
vest only if the Participant is continuously employed by the
Company from the date the PSUs are granted through the end of the
Award Cycle.
(d) Transfer.
Transfer of employment from Verizon
to a Related Company (as defined in paragraph 13), from a Related
Company to Verizon, or from one Related Company to another Related
Company shall not constitute a separation from employment
hereunder, and service with a Related Company shall be treated as
service with the Company for purposes of the three-year continuous
employment requirement in paragraph 5(c).
6. Payment. All payments under this Agreement shall be made
in cash. As soon as practicable after the end of the Award Cycle
(but in no event later than March 15, 2009), except as
described in paragraph 7(c), the value of the vested PSUs (minus
any withholding for taxes) shall be paid to the Participant
(subject, however, to any deferral application that the Participant
has made under the deferral plan (if any) then available to the
Participant). The amount of cash that shall be paid (plus
withholding for taxes and any applicable deferral election) shall
equal the number of vested PSUs times the closing price of
Verizon’s common stock on the New York Exchange as of the
last trading day in the Award Cycle. If the Participant dies before
any payment due hereunder is made, such payment shall be made to
the Participant’s beneficiary. Once a payment has been made
with respect to a PSU, the PSU shall be canceled.
7. Early Cancellation/Accelerated Vesting of
PSUs. Subject to the
provisions of paragraph 7(c) and 5, PSUs may vest or be forfeited
before vesting as follows:
(a) Retirement Before
July 1, 2006, Voluntary Separation On or Before
December 31, 2008 or Discharge for Cause On or Before
December 31, 2008.
(1) If the Participant
(i) Retires (as defined in paragraph 7(b)(4)) before
July 1, 2006, (ii) quits on or before December 31,
2008, (iii) is terminated for Cause (as defined below) on or
before December 31, 2008, or (iv) separates from
employment on or before December 31, 2008 under circumstances
not described in paragraph 7(b), all then-unvested PSUs shall be
canceled immediately and shall not be payable.
(2) For purposes of this Agreement,
“Cause” means (i) grossly incompetent performance
or substantial or continuing inattention to or neglect of the
duties and responsibilities assigned to the Participant; fraud,
misappropriation or embezzlement involving the Company; or a
material breach of the Verizon Code of Business Conduct or any of
the Covenants set forth in Exhibit A to this Agreement, all as
determined by the Executive Vice President – Human Resources
of Verizon in his or her discretion, and the exercise of such
discretion shall be final, conclusive and binding, or
(ii) commission of any felony of which the Participant is
finally adjudged guilty by a court of competent
jurisdiction.
(b) Retirement After
June 30, 2006, Involuntary Termination Without Cause On or
Before December 31, 2008, Termination Due to Death or
Disability On or Before December 31, 2008.
(1) This paragraph 7(b) shall apply
if the Participant:
(i) Retires (as defined below) after
June 30, 2006, or
(ii) Separates from employment by
reason of an involuntary termination without Cause (as determined
by the Executive Vice President – Human Resources of
Verizon), death, or disability (as defined below) on or before the
last day of the Award Cycle. “Disability” shall mean
the total and permanent disability of the Participant as defined
by, or determined under, the Company’s long-term disability
benefit plan.
(2) If the Participant separates
from employment prior to the end of the Award Cycle under
circumstances described in paragraph 7(b)(1), the
Participant’s then-unvested PSUs shall be subject to the
vesting provisions set forth in paragraph 5(a), except that the
three-year continuous employment requirement set forth in paragraph
5(c) shall not apply, provided that the Participant has not and
does not commit a material breach of any of the Covenants and
provided that the Participant executes a release satisfactory to
the Company waiving any claims he may have against the
Company.
(3) Any PSUs that vest pursuant to
paragraph 7(b)(2) shall be payable as soon as practicable after the
end of the Award Cycle (but in no event later than March 15,
2009), except as described in paragraph 7(c). However, the
Committee retains the discretion to determine whether and the
extent to which the Participant is eligible to receive DEUs with
respect to dividends declared after the Participant’s
separation from employment pursuant to paragraph 7(b)(1), and the
Committee’s exercise of this discretion shall be final,
conclusive and binding.
(4) For purposes of this Agreement,
“Retire” means (i) to retire after having attained
at least 15 years of Net Credited Service (as defined under the
Verizon Management Pension Plan) and a
combination of age and years of Net
Credited Service that equals or exceeds 75 points, or
(ii) retirement under any other circumstances determined in
writing by the Executive Vice President – Human Resources of
Verizon.
(c) Change in Control.
Upon the occurrence of a Change in
Control of Verizon (as defined in the Plan) on or before the last
day of the Award Cycle, all then-unvested PSUs shall vest and be
payable immediately (without prorating of the award) at 50% of the
maximum award payout without regard to the performance requirement
in paragraph 5(b) or the three-year continuous employment
requirement in paragraph 5(c). A Change in Control that occurs
after the end of the Award Cycle shall have no effect on whether
any PSUs vest or become payable. A Participant who receives the
immediate award payment provided in this paragraph 7(c) shall be
entitled to receive payment for all DEUs earned before the Change
in Control, even if such DEUs are paid or payable after the Change
in Control.
(d) Vesting Schedule.
Except and to the extent provided in
paragraphs 7(b) and (c), nothing in this paragraph 7 shall alter
the vesting schedule prescribed by paragraph 5.
8. Shareholder Rights. The Participant shall have no rights as a
shareholder with respect to shares of common stock to which this
grant relates. Except as provided in the Plan or in this Agreement,
no adjustment shall be made, for dividends or other rights for
which the record date occurs while the PSUs are
outstanding.
9. Revocation or Amendment of
Agreement. Except to the
extent required by law or specifically contemplated under this
Agreement (including, but not limited to, corrections of any
administrative errors, the determination of the total percentage of
PSUs that become payable, the Measurement Period or Periods for the
Award Cycle, Verizon’s or any other company’s TSR,
Verizon S&P 500 TSR Position, and Verizon IPC TSR Position, and
whether the Participant has been terminated for Cause, has a
disability, or has satisfied the three-year continuous employment
requirement), the Committee or the Executive Vice President –
Human Resources of Verizon may not, without the written consent of
the Participant, (a) revoke this Agreement insofar as it
relates to the PSUs granted hereunder, or (b) make or change
any determination or change any term, condition or provision
affecting the PSUs if the determination or change would materially
and adversely affect the PSUs or the Participant’s legitimate
rights thereto. Nothing in the preceding sentence shall preclude
the Committee or the Executive Vice President – Human
Resources of Verizon from exercising reasonable administrative
discretion with respect to the Plan or this Agreement, and the
exercise of such discretion shall be final, conclusive and
binding.
10. Assignment. The PSUs shall not be assigned, pledged or
transferred except by will or by the laws of descent and
distribution. During the Participant’s lifetime, the PSUs may
be deferred only by the Participant or by the Participant’s
guardian or legal representative in accordance with the deferral
regulations, if an