Interactive Investor

New Vodafone chief faces revolt with shares near 25-year low

30th June 2023 08:32

Graeme Evans from interactive investor

Vodafone shares are at their lowest since before the dotcom boom and there's been little reaction so far to a planned merger with Three.  The AGM should be interesting. Royal Mail and SSE also face shareholders next month.

Long-suffering Vodafone Group (LSE:VOD) shareholders look set to give the company’s board a bumpy AGM ride after the salary for running the mobile phone giant jumped to £1.25 million.

Voting advisory firm Glass Lewis is concerned that the base pay of new boss Margherita Della Valle is at a 15.6% premium compared to her predecessor Nick Read, particularly in light of the steady decline for shares over the past five years.

    It recommends shareholders oppose the annual remuneration report, which also shows executives got 55.8% of their maximum bonus in a year when shares hit a two-decade low.


    When: 10am, Tuesday 25 July.

    Where: The Pavilion, Vodafone House, The Connection, Newbury, Berkshire RG14 2FN.

    How to participate: A live webcast of the meeting will be available. Shareholders who want to submit comments or questions should do so by 6.30pm, Friday 21 July, with the deadline for proxy voting instructions the same day at 10am. More AGM details can be found here.

    Who’s in the chair? Jean-François van Boxmeer, who spent 15 years as chief executive of Heineken, was appointed in November 2020.

    How did the company do in the year to 31 March? Revenues of 45.7 billion euros (£39.3 billion) were unchanged, with growth in Africa and higher equipment sales offset by lower European service revenue and exchange rate movements. Adjusted earnings declined by 1.3% to 14.7 billion euros (£12.6 billion) due to higher energy costs and a poor commercial performance in Germany. Adjusted earnings per share of 11.45 euro cents (9.84p) fell from 11.68 cents. The final dividend of 4.5 cents will be paid on 4 August, resulting in an unchanged total for the year of nine eurocents.

    How have shares performed? Down 29% at 89.3p (74.3p on Thursday).

    How much is the boss paid? Margherita Della Valle’s salary was set at £1.25 million following her appointment in April. Her annual bonus opportunity is worth up to a maximum 200% of salary, with the outturn based 70% on growth and 30% on customer metrics. The weightings have been adjusted this year in order to ensure performance against the company’s strategic priorities is fully incentivised. The long-term incentive scheme offers up to 500% of salary, dependent on the unchanged benchmarks of adjusted free cash flow, relative total shareholder return and sustainability across a three-year period. The maximum overall opportunity is £10.1 million, rising to £13.3 million in the event of 50% share price growth.

    What about the former boss? Nick Read, who was chief executive between October 2018 and the end of 2022, got a total of £3.8 million. This included his salary of £803,000 for the nine month period and an annual bonus of £904,000 based on 55.8% of the maximum opportunity. The 53% vesting of long-term incentive shares awarded in 2020 accounted for £2.05 million of the final figure. Della Valle, who was previously chief financial officer and then interim chief executive from 1 January, got overall remuneration of £3.7 million for the year, including an annual bonus of £1.2 million and long-term incentives worth £1.6 million.

    What’s changing in the new remuneration policy? The current policy was approved by shareholders at the 2020 AGM with 96.41% of votes in favour. Vodafone’s remuneration committee is not planning material changes this year. As well as the review of the annual bonus scheme in order to support current priorities, the company plans to strengthen its clawback policy through an expanded list of trigger events.

    What’s the view of voting agencies? Glass Lewis is concerned that Della Valle's base salary, as group chief executive is set at a 15.6% premium compared to her predecessor. The agency said: “We believe a phased approach to salary increases would have been particularly prudent in this case given the steady decline in the company's share price over the past five years.” It has severe reservations about supporting the remuneration report and recommends shareholders vote against this resolution.

    What’s the company say about the CEO’s salary? The remuneration committee points out the new salary is appropriate when compared against the external market and is fair from a gender pay perspective. It also reflects both the responsibilities and demands of the role. During the year no additional salary payment or allowance has been made to Della Valle for carrying out dual roles until the appointment of a new chief financial officer.

    How did last year’s AGM go? The annual remuneration report was backed with 97.90% of votes in favour. 

    How’s the company doing on diversity? The gender split of the board is 53.8% female, including the chief executive and senior independent director. One member of the board is from a minority ethnic background.


    When: 12.30pm, Thursday 20 July.

    Where: Perth Concert Hall, Mill Street, Perth PH1 5HZ.

    How to participate: Those joining the SSE (LSE:SSE)E AGM electronically via the online platform will be able to watch the meeting, ask questions, and vote in real time. Responses to questions submitted in advance of the meeting by 5pm, Monday 3 July will be published no later than 5pm, Wednesday 12 July. The deadline for proxy voting instructions is 12.30pm, Tuesday 18 July. More AGM details can be found here.

    Who’s in the chair? Former BP executive John Manzoni was appointed in April 2021.

    How did the company do in the year to 31 March? Profitability in renewables benefited from strong prices under the company’s flexible hydro and wind hedging position, offset by unfavourable weather conditions and the Electricity Generator Levy. Operating profits rose by 65% to £2.53 billion and adjusted earnings per share by 75% to 166p, but the reported loss was 14.7p a share due to a net £2.3 billion adverse fair value movement on derivatives. A final dividend of 67.7p a share will be paid on 21 September, representing a weighted average annual RPI rate of 12.9% and making a full year dividend of 96.7p a share. This figure is due to be rebased to 60p for 2023/24, with increases of 5-10% per annum up to 2026/27.

    How have shares performed? Up 3% to 1,803p (1,822p on Thursday).

    How much is the boss paid? Alistair Phillips-Davies received a 5% pay rise in April, taking his base salary to £999,224. Total remuneration amounted to £4.63 million, just short of last year when he received his highest sum since becoming chief executive in 2013. The death of a contractor working on Shetland prompted the use of discretion to reduce this year’s bonus from 93% of the maximum opportunity to 88%, resulting in the payment of £1.26 million in cash and shares. The 76% vesting of long-term incentives granted in 2020 accounted for £2 million of the final figure. SSE’s remuneration committee said its total pay potential remains below the median for a company in the FTSE 20-50 upper quartile excluding financial services. It said: “As SSE scales and becomes more international, the committee will increasingly keep a watching brief on pay trends and pay levels across the FTSE 50.”

    How did last year’s AGM go? The annual remuneration report was backed with 97.42% of votes in favour, with the new three-year remuneration policy getting 91.43% support.

    What’s the view of voting agencies? Glass Lewis recommends shareholders vote in favour of the annual remuneration report.

    How’s the company doing on diversity? Female representation on the board has fallen to 42% due to changes made after the end of the financial year. The board has one director from an ethnic minority background.

    Is there a climate-related vote? The 2021 AGM established a framework for annual advisory votes on the company’s Net Zero Transition report. If there is a significant vote against the resolution, the company has pledged to hold discussions with shareholders. The vote in 2022 got 98.92% support.

    International Distributions Services

    When: 11am, Thursday 20 July.

    Where: Mercure Norwich Hotel, Boundary Road, Norwich, NR3 2BA.

    How to participate: Shareholders attending the International Distributions Services (LSE:IDS) AGM electronically will be able to see and hear directors, ask questions and vote in real time. Proxy voting instructions need to be returned no later than 11am, Tuesday 18 July. Questions in advance of the meeting can be submitted to More AGM details can be found here.

    Who’s in the chair? The former British Airways chief executive Keith Williams has been in the role since May 2019, a period that included eight months as interim boss.

    How did the company do in the year to 26 March? Royal Mail revenues fell 13% to £7.4 billion as the strike-hit letters and parcels delivery business recorded an operating loss of £419 million. The European GLS logistics arm grew revenues by 10.2% to £4.6 billion for an operating profit 1.8% higher at £348 million. The pre-tax loss was £110 million or 20.5p a share, compared with earnings of 60p a share the previous year. No dividend was declared.

    How have shares performed? Down 36% at 230.4p (215.5p on Thursday).

    How much did the boss get? Royal Mail chief executive Simon Thompson, who is due to leave the group on 31 October, got a total of £634,000 for 2022/23. There was no payout under the annual bonus scheme. Meanwhile, group finance boss Mick Jeavons received £936,000 that included a bonus of £251,000 equivalent to 38.5% of the maximum opportunity and £175,000 from the 60% vesting of long-term incentives. Total shareholder return relative to the FTSE 50-150 accounted for the bulk of this vesting, even though a price of 227.9p in the 13-week average to 26 March was below the 304.4p when granted in 2020. GLS chief executive Martin Seidenberg has received a pay rise of 6.6% to 653,510 euros (£561,200) for this year, having picked up 85% of the maximum bonus for a total that converted to £1.48 million in 2022/23.

    What’s in the new remuneration policy? It was last approved by shareholders in 2020 when there were 99% of votes in favour. The remuneration committee believes the policy remains fit for purpose, with a small number of changes proposed. The maximum annual bonus remains 150% of salary subject to 75% financial metrics, with the grant of long-term incentives equivalent to 150% of salary. Their vesting depends on a three-year performance period focused 40% on total shareholder return and the rest on financial measures.

    How did last year’s AGM go? The vote on the annual remuneration report got 99.44% support.

    What’s the view of voting agencies? Glass Lewis recommends shareholders support the annual remuneration report and the binding vote on the new three-year remuneration policy. 

    How’s the company doing on diversity? The proportion of women on the board was 33%, having been at or above the 40% target in the two prior years. The company meets the Parker Review target for FTSE 250 boards to have at least one director from an ethnic minority background by 2024.

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