Stock options aren’t an option,

so Verizon offers alternative benefit
Verizon Wireless has found a way to keep its employees more linked to the success of the company. Value Appreciation Rights, or VARs, are Verizon’s equivalent to stock options, and are being offered to all full-time and part-time employees. The program is Verizon’s answer to stock options offered by publicly held companies.
“It sets us on a level playing field with other public companies that offer stock options,” said Dawn Orlebeke, Verizon human resources consultant in Milwaukee.
Part of the goal of the VARs program is to keep Verizon competitive in the job market.
“Our industry is extremely competitive,” Orlebeke said. “We want to give quality employees a reason to come here.”
No other private company in the industry has implemented a program similar to Verizon’s, according to the telecommunications company. Although it has not received any feedback from competitors, Carolyn Schamberger, Verizon public relations manager for the Midwest area, is sure that other companies are aware of what Verizon is doing and are watching for the success of the VAR program.
When the eight so-called “legacy companies” came together to form Verizon Wireless, the executives wanted to reevaluate the benefits package. The VARs are a part of a total package that combined the “best of the best” from those companies, Schamberger said.
Employee input was an important part of the reevaluation process, Schamberger said. “We wanted to know the kind of things that would make them want to stay,” she said.
The VARs were first distributed last July to all employees who work 20 hours or more, with the exception of a few who are represented by a union. Most companies only reward higher level managers and executives.
“I wasn’t expecting it. It was a pleasant surprise,” Schamberger said. “It adds a wonderful motivational factor.”
Verizon’s employees have met the new program with much enthusiasm. Because it gives them a direct stake in the company, they can feel like individual contributors, Orlebeke said.
“The majority are excited,” Orlebeke said. “This is something they didn’t have before. There wasn’t anything to show the impact of their work on the company.”
“I think it’s great,” said Mary Shully, Verizon advertising manager. “It’s like money I didn’t know I had.
Shully assumed that there would be some form of long-term benefits package for the employees once Verizon Wireless was formed, but she admits she was surprised with the way the VARs seem to reward everyone.
“It’s a great way to help keep good employees and a way to let people know they’re appreciated,” she said.
Jim O’Brien, Verizon indirect account manager, was also surprised at the announcement of the VAR program.
“I think a lot of people were (surprised),” he said. “This is a mutual agreement where people will work together and want to see Verizon succeed. It’s a good opportunity.”
O’Brien plans to leave his VARs alone for a while after they can be cashed in.
“Sometimes it’s better just not to touch it,” he said. “I’ll leave them alone and then decide (what to do with them).”
The VARs are not only important to keep existing employees satisfied with their jobs, but also to draw new employees in.
“Especially in our industry where every company has the same nuts and bolts benefit package, people usually search for things that are different,” Orlebeke said. “It indirectly makes a statement that says we care about our employees.”
The VARs were distributed among the employees using a formula that took into account base salary. They will become fully vested after three years but can be held for up to 10 years after their issue, so employees will be able to “cash in” for the first time in 2003, Orlebeke said.
“It gives them a stake in the company,” Orlebeke said. “The more successful they are at their jobs, the more valuable the VARs become.”
Human resources will get together annually and, based on the company’s growth, will decide whether or not to issue more VARs.
If the company does well, just like stocks, the value of the VARs will increase. “If we succeed, they succeed,” Schamberger said.
If Verizon were to become a publicly traded company, the VARs would be converted into stock options for the employees, Schamberger said.
“We continue to demonstrate to our employees that we care and value their work,” Schamberger said. “It links them to the company’s success.”
Aug. 17, 2001 Small Business Times, Milwaukee