McLaurin deal to fuel shareholder unrest at Vodafone

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Vodafone, the telecoms giant, has set itself on course for another clash with shareholders over corporate governance after revealing plans to pay its chairman, Lord MacLaurin of Knebworth, a salary of £125,000 a year for consultancy work, after he retires from the top job in July.

The proposal, outlined in a letter to shareholders, has angered several key investors who have been disappointed with the company's performance over the past year.

Sir John Bond, the outgoing chairman of HSBC, is due to take over from Lord MacLaurin this summer, with several investors hoping that a switch in senior management will be a catalyst to change in the organisation.

Lord MacLaurin, who has been chairman of the group for nine years, remains closely associated with Vodafone's period of rapid expansion at the start of the decade - characterised by its record £100bn take-over of Mannesmann, the German telecoms business in 2000.

Earlier this year, however, the group was forced to write down some £28bn of goodwill, most of which related to the Mannesmann deal. Shares in Vodafone have fallen more than 16 per cent over the past eight months, at a time when the London market has seen double-digit gains.

The row over retaining Lord MacLaurin will be the Vodafone board's third run in with shareholders over corporate governance in less than three months. In March, Vodafone's former chief executive, Sir Christopher Gent, resigned his honorary post as "lifetime president" of the company, after shareholders and directors alleged he had tried to block the appointment of the current CEO, Arun Sarin. Investors were also concerned that Sir Christopher was continuing to have too much influence over the business. He strenuously denied both allegations.

Lord MacLaurin also came under fire from shareholders earlier this year when it emerged he was to be paid a £500,000 golden handshake when he steps down in July.

Vodafone yesterday refused to comment on its plans to keep Lord MacLaurin on as a consultant. However, Mr Sarin is expected to begin discussions about the proposals with key investors this week, ahead of the next meeting of the remuneration committee on 23 May.

The CEO will also try to allay rising shareholder concerns over proposed changes to the executive bonus scheme, which will see earnings growth targets almost halved.