Vodafone pledges pay review after AGM revolt

The mobile phone operator Vodafone pledged yesterday to conduct a "thorough" review of its remuneration policy after shareholders attacked directors' million pound plus salary packages.

Almost 40 per cent of the votes at yesterday's annual meeting did not vote in favour of approving the remuneration policy, one of the largest protest votes seen over executive pay. Around 10 per cent voted against the scheme, while almost 30 per cent abstained.

Lord MacLaurin of Knebworth, the company's chairman, acknowledging that a "significant number" of shareholders had expressed their objections, told the meeting that the complexities of the pay policy allowed for "misinterpretation".

"In view of this, and the major changes in conditions in the telecoms industry and the securities market, we shall be conducting a thorough review of our remuneration arrangements," Lord MacLaurin said.

The committee conducting the review will be chaired by Penny Hughes, a non-executive director, although the consultancy William Mercer has also been appointed. Its findings will be presented to shareholders.

Sir Christopher Gent, Vodafone's chief executive, said the review would look at best practices in the industry as well as ways of simplifying the scheme. He said the company had come up with the idea of conducting a review a couple of months ago.

Last year, Sir Christopher received a pay package totalling £6.9m including a £5m bonus and a £1m basic salary. Three other executive directors, Peter Bamford, Julian Horn-Smith and Ken Hydon, were also awarded multimillion-pound packages. Mr Bamford received a £2m payout including a £1m bonus while Mr Horn-Smith and Mr Hydon were each paid about £3m, including £2m bonuses.

While Sir Christopher said he had received "unreasonable and unfair" criticism on remuneration, considering it was not set by him, many shareholders yesterday found the size of directors' pay packages difficult to swallow. "It's excessive," one shareholder said, adding: "Everyone up there [on the board] is having a very nice meal while we down here are on a much more frugal diet."

Lord MacLaurin defended the directors' pay, saying the awards were competitive for a global business. Consequently, he said the company would "unashamedly" pay "the very best salaries for the very best people".

Almost every shareholder who spoke at the meeting raised the topic. They were also angered by the fall in Vodafone's shares and the amount of new equitythe company had issued to pay for acquisitions.

Separately, Sir Christopher said he would like J-Phone, the mobile unit of Japan Telecom, to list inJapan. Vodafone has an economic interest of around 60 per cent in J–Phone.