Vodafone chiefs cut bonuses in effort to prevent investor revolt

Vodafone’s top executives have agreed to cut their share bonuses by a fifth in an attempt to quell a potential investor revolt at its annual meeting this month.

The company, which in May cut its dividend payout to shareholders for the first time in its history, said its chief executive, Nick Read, and its finance chief, Margherita Della Valle, had voluntarily requested the 20% cut in share awards in recognition of the company’s plummeting value in the last year.

Vodafone’s share price has plunged 30% in 12 months, wiping more than £15bn off the company’s stock market value, from £51bn to £35.7bn.

“This was requested to reflect the low valuation of the share price following its reduction over the year,” the company said. “Particularly the change in value between the date of the remuneration committee’s decision in respect of the value of the awards and the date of grant.”

The agreed cut to the pair’s long-term incentive awards will see them forgo 1.56m of shares, worth more than £2m at the current share price. The share awards, which have been granted, relate to the performance of the company over the next three years. The awards will vest at the end of the 2022 financial year.

Read, Vodafone’s former finance chief, took over the top job from Vittorio Colao in October, and was paid total remuneration of £3m in the year to the end of March. Della Valle was paid £1.17m, according to the company’s annual report.

ISS, the influential shareholder advisory service, is recommending shareholders vote against Vodafone’s remuneration report at its annual meeting on 23 July.

ISS’s report says the remuneration report should be rejected because share awards to bosses under Vodafone’s long-term incentive plan were significantly higher than a year ago.

“When there has been a material decline in a company’s share price, remuneration committees should consider reducing the size of LTIP awards at the time of grant,” ISS says.

The advisory service Pirc has recommended investors abstain from casting a vote on whether to accept or reject the remuneration report.

However, Glass Lewis, another influential investor advisory service, has recommended investors vote in favour of all resolutions, including remuneration.

Read had consistently said Vodafone’s dividend would not be cut, despite facing challenging market conditions in a number of areas of its global operation. Six months later, he was forced into a U-turn, announcing a 40% dividend cut, the first since it became a standalone business in 1990.

Read blamed factors including the ballooning cost of buying 5G spectrum in European auctions, €4bn (£3.6bn) in Germany and Italy over the past year. Vodafone’s €27bn debt pile will be stretched further when the company completes its €18.4bn deal to buy Liberty Global’s German and eastern European cable assets this year.