UK - Pension funds have told telecommunications giant Vodafone to amend its executive remuneration package or face a backlash from investors.
The warning follows the mobile phone operator’s shock announcement that its chief executive, Christopher Gent, is to leave the business after 17 years.
Arun Sarin – a former Vodafone executive and current board member – has been named as Gent’s replacement.
NAPF investment director David Gould said pension funds investing in Vodafone have had a rough ride over the last year and the company should be taking steps to ensure there is not a re-run of such events in the future.
Vodafone saw a 41% increase in half-year profits in November last year, only five months after it hit the headlines with record losses of £13.5bn.
At the time of the group’s losses, investors expressed fury at the decision to award the Gent a £10m bonus for overseeing the purchase of German operator Mannesmann in 2000.
Gould said the mobile phone operator should apply the rules set out in the best practice statement – which was drawn up in association with the ABI – when drafting the new executive’s contract. The document sets out ways for boards to avoid unmerited payments.
Gould explained: “Gent had a substantial payment for overseeing a transaction – a value that is yet to be really proved.
“We have argued that firms must have a longer time scale for pay rewards. We expect this to be the case for the incoming person.”
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