2018 Guide to Effective Proxies

6 TH EDITION | GUIDE TO EFFECTIVE PROXIES 98 VERIZON COMMUNICATIONS INC. iii | Verizon 2018ProxyStatement ProxySummary | Agendaandvoting recommendations Agendaandvotingrecommendations Item 1 ElectionofDirectors TheBoardofDirectorsrecommendsthatyouvotefortheelectionoftheseDirectorcandidates. Shareholdersarebeingasked toelect 11Directors.Verizon’sDirectorsareelected fora termofoneyearbya majorityof the votescast inanuncontestedelection.Additional informationabout theDirectorcandidatesand their respectivequalificationsbeginsonpage6. ShellyeL.Archambeau MetricStream, Inc. Former MarkT.Bertolini Aetna Inc. RichardL.Carrión ExecutiveChairman, Popular, Inc. MelanieL.Healey FormerGroupPresidentof TheProcter&GambleCompany M.FrancesKeeth LeadDirector RetiredExecutiveVicePresident, RoyalDutchShellplc LowellC.McAdam Chairman VerizonCommunications Inc. ClarenceOtis,Jr. Restaurants, Inc. RodneyE.Slater Partner,SquirePattonBoggsLLP KathrynA.Tesija FormerExecutiveVicePresidentandChiefMerchandising GregoryD.Wasson BootsAlliance, Inc. GregoryG.Weaver Deloitte&ToucheLLP AuditCommitteeFinancialExpert CommitteeChair *AgesandCommitteemembershipsareasofMarch5,2018 AgendaandvotingrecommendationsItem1ElectionofDirectorsTheBoardofDirectorsrecommendsthatyouvotefortheelectionoftheseDirectorcandidates.Shareholdersarebeingaskedtoelect[12]Directors.Verizon’sDirectorsareelectedforatermofoneyearbyamajorityofthevotescastinanuncontestedelection.AdditionalinformationabouttheDirectorcandidatesandtheirrespectivequalifcationsbeginsonpage6.CommitteeMemberships*CorporateDirectorGovernanceHumanResourcesNameAge*SincePrimaryOccupationIndependentAuditandPolicyFinanceShellyeL.Archambeau552013ChiefExecutiveOfficer,MetricStream,Inc.MarkT.Bertolini612015ChairmanandChiefExecutiveOfficer,AetnaInc.RichardL.Carrión651997ExecutiveChairman,Popular,Inc.MelanieL.Healey562011FormerGroupPresidentofTheProcter&GambleCompanyM.FrancesKeeth712006RetiredExecutiveVicePresident,LeadDirectorRoyalDutchShellplcKarl-LudwigKley662015FormerChairmanoftheExecutiveBoardandChiefExecutiveOfficer,MerckKGaALowellC.McAdam632011ChairmanandChiefExecutiveOfficer,ChairmanVerizonCommunicationsIncClarenceOtis,Jr.612006FormerChairmanandChiefExecutiveOfficer,DardenRestaurants,Inc.RodneyE.Slater632010Partner,SquirePattonBoggsLLPKathryn A.Tesija552012FormerExecutiveVicePresidentandChiefMerchandisingandSupplyChainOfficer,TargetCorporationGregoryD.Wasson592013FormerPresidentandChiefExecutiveOfficer,WalgreensBootsAlliance,Inc.GregoryG.Weaver662015FormerChairmanandChiefExecutiveOfficer,Deloitte&ToucheLLPAuditCommitteeFinancialExpertCommitteeChair*AgesandCommitteemembershipsareasofMarch5,2017 Total of 04 pages in section ProxySummary | Executivecompensationprogramhighlights Verizon 2018ProxyStatement | ii 2017Compensation the “SummaryCompensationTable”pursuant toU.S.SecuritiesandExchangeCommission (SEC) rules.Pleasesee thenotes accompanying the “Summarycompensation” tableonpage46 formore information. LowellMcAdam Chairman and MatthewEllis ExecutiveVicePresident JohnStratton ExecutiveVicePresident and President –GlobalOperations HansVestberg* ExecutiveVicePresident, President –GlobalNetworks and MarniWalden** ExecutiveVicePresident and President –GlobalMedia Pay-for-performance Extensive focuson variable, incentive-basedpay Nodefinedbenefitpensionor supplemental retirementbenefits Noexecutiveemploymentagreements Nocash severancebenefits for theCEO No taxgross-ups Objectives Alignexecutives’and shareholders’ interests Attract, retainandmotivatehigh-performing executives Governance leader Semi-annual shareholderoutreach Shareholderapprovalpolicy for severancebenefits Significantexecutive shareownership requirements Clawbackpolicy Anti-hedgingpolicy Say-on-payadvisory voteevery year Independentcompensationconsultant * April3,2017. **Ms.Walden servedasExecutiveVicePresidentandPresident –GlobalMediauntilDecember31,2017.Ms.Walden left VerizononFebruary28,2018. Fixedpay Basesalary Incentive-basedpay 70% long-term incentives 20% short-term incentives 90% 10% Ourexecutivecompensationprogram reflectsVerizon’scommitment to industry-leadingcompensationandgoverna ce practices.Theprogram isdiscussed indetail in theCompensationDiscussionandAnalysisbeginningonpage26. 1,600,000 12,000,062 17,937,581 5,649,368 13,540,151 9,817,419 7,256,922 3,750,088 10,987,566 7,500,069 4,750,035 742,308 942,308 807,497 942,308 Executivecompensationprogramhighlights Salary $ $ $ $ Bonus Stock Awards $ Option Awards 543,570 107,724 204,837 254,353 195,819 $ AllOth r Compensation Total 3,720,000 1,046,250 1,325,250 1,255,500 1,325,250 $ Non-Equity IncentivePlan Compensation 73,949 2,998 80,190 0 0 0 0 0 0 0 0 0 0 0 43,510 $ Change inPension Value andNonqualified DeferredCompensation Earnings ExecutivecompensationprogramhighlightsOurexecutivecompensationprogramreectsVerizon’scommitmenttoindustry-leadingcompensationandgovernancepractices.TheprogramisdiscussedindetailintheCompensationDiscussionandAnalysisbeginningonpage26.ObjectivesPay-for-performanceAlignexecutives’andshareholders’interestsExtensivefocusonvariable,incentive-basedpayAttract,retainandmotivatehigh-performingexecutivesBasesalaryFFixedpayGovernanceleader10%90%Incentive-basedpay20%short-termincentives70%long-termincentivesSemi-annualshareholderoutreachShareholderapprovalpolicyforseverancebenetsSignicantexecutiveshareownershiprequirementsNNodenedbeneftpensionorsupplementalretirementbenetsClawbackpolicyAnti-hedgingpolicyNoexecutiveemploymentagreementsSay-on-payadvisoryvoteeveryyearNocashseverancebenetsfortheCEOIndependentcompensationconsultantNotaxgross-ups2017CompensationThesummarybelowshowsthe2017compensationforeachofournamedexecutiveofficers,asrequiredtobereportedinthe“SummaryCompensationTable”pursuanttoU.S.SecuritiesandExchangeCommission(SEC)rules.Pleaseseethenotesaccompanyingthe“SummaryCompensationTable”onpage46formoreinformation.ChangeinPension Non-EquityValueandNonqualifiedStockOptionIncentivePlanDeferredCompensationAllOtherSalaryBonusAwardsAwardsCompensationEarningsCompensationTotalNameandprincipalposition$$$$$$$$LowellC.McAdam00,000,000000,000,00000,000,000000,000000,00000,000,000ChairmanandChiefExecutiveOfficerMatthewD.Ellis00,000,000000,000,00000,000,000000,000000,00000,000,000ExecutiveVicePresidentandChiefFinancialOfficerJohnG.Stratton00,000,000000,000,00000,000,000000,000000,00000,000,000ExecutiveVicePresidentandPresident–GlobalOperationsHansE.Vestberg*00,000,000000,000,00000,000,000000,000000,00000,000,000ExecutiveVicePresident,President–GlobalNetworksandChiefTechnologyOfficerMarniM.Walden**00,000,000000,000,00000,000,000000,000000,00000,000,000ExecutiveVicePresidentandPresident–GlobalMedia*Mr.VestbergwashiredasExecutiveVicePresident,President–GlobalNetworksandChiefTechnologyOfficereffectiveApril3,2017.**Ms.WaldenservedasExecutiveVicePresidentandPresident–GlobalMediauntilDecember31,2017.1,600,00012,000,062TBD73,949543,570TBD742,3083,750,088TBD2,998107,724TBD942,30810,987,566TBD80,190204,837TBD807,4977,500,069 TBD0234,047TBD942,3084,750,035TBD43,510195,819TBDMs.WaldenleftVerizononFebruaryXX,2018. 7 i | Verizon 2018ProxyStatement Proxy Summary Current/FormerCEO 9 PublicBoardService 12 Accounting/Finance 5 RiskManagement Global 12 Operational 11 Technology/Internet 2 Consumer/CustomerService 6 Women 4 Hispanic/AfricanAmerican 5 Boarddiversityandexperience Ofour 12currentboardmembers: “ The Verizon Board embodies a range of viewpoints, backgrounds and expertise because we believe that diversity is a critical element of a well-functioning board. 0 >10 Median tenure: 5years,9months Average tenure: 7years,4months Averageage: 62years Boardtenure (as ofMarch 19, 2018) ProxySummaryTheVerizonBoardembodiesarangeofviewpoints,backgroundsandexpertise“becausewebelievethatdiversityisacriticalelementofawell-functioningboard.BoarddiversityandexperienceOfour12boardmembers:Current/FormerCEO9PublicBoardService12Accounting/Finance5RiskManagement17Global12Operational11Technology/Internet2Consumer/CustomerService6Women4Hispanic/AfricanAmerican5Boardtenure(asofMarch19,2018)Averagetenure:Averagetenure:7years,4monthsAverageage:062yearsMediantenure:5years,9months W. R. BERKLEY PROXYSUMMARY Strategiesthatwepursueto createlong-termvaluemay resultinshort-termexpenses,but theyultimatelybenefitlong-term ROEandbuildvalueforthe future. Anexampleisourstrategy ofstartingbusinessesratherthan acquiringthem. NetUnderwriting Income Netpremiumswritten -$10,000 $0 $10,000 $20,000 $30,000 $40,000 $50,000 $70,000 $60,000 -$50,000 $0 $50,000 $100,000 $150,000 $200,000 $250,000 $350,000 $300,000 200620072008200920102011201220132014201520162017 NUI ($000) NPW ($000) ExampleofaStartUp (BasedonActualResults) Wemakelong-termdecisionstoenhancelong-termROEandbuildstockholdervalue. Investingforcapitalgains enhancesourROE. Our investmentstrategyisdesigned tosupportourlong-termreturn target.Inresponsetothe extendedlowinterestrate environment,wehaveincreased ourinvestmentsinprivateequity, realestateandotherassets. Thesechangeshavecausedusto giveupsomecurrentinvestment income,butthegainsultimately benefitourROEwhenviewed overlongerperiods. 9.6% 9.9% 11.1% 9.2% 9.3% 6.7% 3.3% 1.8% 3.8% 1.8% 4.0% 4.2% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% 2012 2013 2014 2015 2016 2017 ContributionofRealized InvestmentGains toROE ROEExcludingRealizedGains, NetofTax ROEFromRealizedGainson InvestmentSales, ExcludingPerformance-BasedCompensatory Costs 12.9% 15.0% 11.0% 13.3% 11.6% 10.9% Wecontinuetohaveasignificantamountofunrealizedgains,bothonandoffthebalancesheet. For certainofourinvestments,accountingrulesdepartfromtheunderlyingeconomicsandrequireustocarry theinvestmentsatavalueotherthanfairvalue.Theappreciationinthevalueofcertainofthese investmentsisnotreflectedinourfinancialstatementsuntiltheyaresold. Realizedgainshavecontributedanaverageof3.2%toourROEoverthepast6years. 6 W.R.BerkleyCorporation U.S.InsuredCatLosses(2015Dollars)Sources:PropertyClaimsService/ISO;InsuranceInformationInstitute;MunichReReportedAccidentYearLossRatioAveragesAsofDecember31,2017ExampleofaStartUpContributionofRealizedInvestmentGainstoROEExampleofOffBalanceSheetGains Total of 16 pages in section PROXYSUMMARY Lossesfromlargeevents causesignificant volatilityinindustry results. Weseekto maximizereturnsona risk-adjustedbasis. Asa result,ourcatastrophe lossesfrommajor industryeventshave beensignificantlylower thanindustryaverages. 18% (Percent) 15% 12% 9% Hurricane Andrew IndustryEvent Loss/Surplus WRBEvent Loss/Surplus *Ratio is forend-of-quarter surplus immediatelyprior toevent. **Change in surplus from12/31/2007peak todateofmaximum capitalerosionat3/31/09.Reflects lossesoffsetbyearnings. ***Assumes$80billion inaggregate losses fromHurricanesHarvey, IrmaandMariaandearthquakes inMexico. Sources:PCS; Insurance Information Institute;A.M.Best;WRB 6.9% 1.1% 10.9% 2.4% 13.8% 0.9% 16.2% 0.0% 4.3% 0.9% Northridge Earthquake Sept.11 Attacks Hurricane Katrina Financial Crisis** Storm Sandy 6% 3% 0% RatioofEvent Loss toSurplus for LargestU.S.EventsSince1992* 9.6% 4.3% 11.4% 1.9% 3Q2017 Events*** 3.0% 1.7% 2Q11 Storms Wemanageourbusinesswithanappropriateconsiderationofvolatilityinanalyzingrisk. Thelackofvolatilityinourresultshascontributedtosuperiorlong-termperformance. $- $40 $80 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 $120 $160 $Billions U.S. InsuredCat Losses (2015Dollars) Sources:PropertyClaimsService/ISO; Insurance Information Institute;MunichRe WRBAverage LossRatio HighlyRatedPeers’Average LossRatio 63.0 64.0 65.0 66.0 67.0 68.0 ReportedAccidentYear LossRatioAverages AsofDecember31,2017 60.0 61.0 62.0 10YearAverage 7YearAverage 5YearAverage 3YearAverage Source:CompanyReports HighlyRatedPeers consistof:ACGL,AFG,AGII,AWH,CNA,CB,CINF,ENH,HIG, LIBERTY MUTUAL,MKL,NAV,RE,RLI,THG,TRV,XL,Y Thegraphaboveontheleftshowshistoricalinsuredcatastrophelosses,highlightingabenignperiodfro 2013to2015,andarecordyearin2017.Thegraphaboveontherightshowsouraverageaccide tyear lossratioscomparedtohighly-ratedcompetitorsoverperiodsofthree,five,sevenandtenyearsthrough 2017.(Alowerlossratioisbetter.) Ouroutperformanceappearedtohavedeclinedinthe5yearperiodended2017,ascatastropheactivity wasbenignfrom2013to2015.However,areturntonormalizedcatastrophelossesin2016andarecord levelofcatastrophelossesin2017demonstratedthattheoutperformanceremains,atributetoour disciplinedunderwritingandriskmanagement. Thecornerstonetolong-termsuccessisunderstandingrisk-adjustedreturn.Allreturnsarenotcreated equal,andweneedtobeconsciousoftheriskswearetakingtoachieveourreturns. 2018ProxyStatement 5 WRB:WriteasmuchgoodbusinessaspossibleWRB:AccelerategrowthaspriceadequacyreturnstovariousmarketsegmentsWRB:Capitalizeonmarketdislocations;Createnewunits/divisionstopositionformarketturnWRB:SlowergrowthandmoreselectiveunderwritingWRB:Focusonretention;maintaindisciplinedunderwritingWRB:BewillingtosacrificevolumeforprofitabilityPriceIncreasesHighProfitabilityIncreasesCapital+Newcapacity=IncreasescompetitionPriceReductionLowProfitabilitycapacityWithdrawalReducedCompetitionHardMarketCycleandCapitalManagementSoftMarketRatioofeventlosstosurplusforlargesteventssince1992**Ratioisforend-of-quartersurplusimmediatelypriortoevent.**Changeinsurplusfrom12/31/2007peaktodateofmaximumcapitalerosionat3/31/09.Reflectslossesoffsetbyearnings.***Assumes$80BinaggregatelossesfromHurricanesHarvey,Irma,MariaandearthquakesinMexico.Sources:PCS;InsuranceInformationInstitute;A.M.Best;WRB PROXYSUMMARY Our Business Must Be Managed with a Long-Term Perspective Thepropertycasualtyinsurancebusiness hashistoricallybeencyclical. Itcantakean extendedtimeforinsuredlossestobe reported,ultimatecoststobedetermined andfinalpaymentstobemade,especially forliabilityclaims.Theuncertaintyof insurers’ultimatelosscostsandfluctuating competitiveconditionsresultinalternating periodsof“hard”markets(moreprofitable forinsurers)and“soft”markets(less profitableforinsurers). ThePropertyCasualty Insurance Industry isCyclic l -5% 0% 5% 10% 15% 20% 25% 1951 1957 1963 1969 1975 1981 1987 1993 1999 2005 2011 2017 Source: Insurance Information Institute USPropertyCasualty Insurance IndustryROE% Becausethiscyclicalitycancausevariabilityinresultsovertime,aninsurer’sresultsshouldbe consideredovertheentirelengthofthecycle. Wemanageourbusinesstooutperformoverthefullinsurancecycle. Managingapropertycasualty insurancecompanyforthelongtermrequiresdisciplinethroughoutthecycle,especiallyinsoftmarkets. Companiesthataretooaggressiveinsoftmarketscansufferlargelosseslater. TheClassicInsuranceCycle WRB: Writeasmuchgoodbusinessaspossible WRB: Bewilling to sacrifice volume forprofitability WRB: Focuson retention; maintain disciplined underwriting WRB: Slower growthand more selective underwriting WRB: Capitalizeon market dislocations Createnew units/divisions to position for market turn WRB: Accelerate growthasprice adequacy returns to variousmarket segments Price Increases Price Reductions Low Profitability IncreasedCapital NeedsaReturn+ New capacity= Increased competition Capacity Withdrawal Reduced Competition High Profitability Wewillforgotop-linegrowthwhennecessarytomaintainprofitability. 4 W.R.BerkleyCorporation