Arun Sarin has survived a significant shareholder protest vote against his re-election as chief executive of Vodafone, but has been warned it is time to deliver on the company's strategy.
Almost 10 per cent of shareholders voted against his re-election at the company's annual meeting and investors representing a further 5 per cent of shares abstained. Institutional shareholders including Morley Fund Management and Standard Life voted against Mr Sarin after repeated downgrades to the company's financial outlook and a lack of faith in his ability to guide Vodafone through structural changes within the telecoms industry. Lloyd Whitworth, head of core UK equities at Morley Fund Management, said: "Our vote reflected the seriousness of our concerns."
Lord MacLaurin of Knebworth, Vodafone's departing chairman, said the board fully supported Mr Sarin but warned him not to rest easy. "There is absolutely no question of Arun Sarin stepping down from this company," he said, but added: "Arun and his team will have to deliver."
Developed in consultation with the incoming chairman Sir John Bond, Vodafone's strategy is based on improving profitability in mature markets alongside rapid revenue growth in emerging markets. It is also focusing on new growth drivers including fixed- line broadband provision.
Sir John, the former HSBC chairman who is considered crucial to Mr Sarin's future, told reporters at the sidelines of the meeting: "Wherever you work in the world, the performance of management is constantly under review."
Mr Sarin said he planned to address shareholders' concerns through better communication.
While the opposition to Mr Sarin proved significant, executives at other companies have survived stronger rebellions. Manifest, the proxy-voting agency, said in 2003 more than 31 per cent of Provident Financial's shareholders opposed the re-election of Robin Ashton while in the same year, Charles Allen of ITV faced shareholder opposition of nearly 30 per cent.
Mr Sarin's position was not the only hurdle at the fractious Vodafone meeting. Its decision to lower the growth targets by which executive bonuses are calculated was opposed by 20 per cent of shareholders. Luc Vandevelde, the former chairman of Marks & Spencer, was loudly jeered when he justified the easier bonus structure by saying the targets had to be achievable. Standard Life said the scheme "provides significant rewards for achieving unchallenging performance conditions".
Lord MacLaurin said after the meeting that investors had given Vodafone "a yellow card" regarding the bonuses and that he was certain the board would review the scheme. He responded to concerns over reports of a destabilising boardroom bust-up, including one shareholder's view that Vodafone has "a board of charlatans".
Lord MacLaurin retorted: "We are totally united as a board ... I dismiss totally your view that this board is in disarray."Reuse content