Vodafone said it will cut long-term bonuses for its top two executives by a fifth after an investor advisory group took issue with the UK phone company’s remuneration plan.
Chief executive officer Nick Read and chief financial officer Margherita Della Valle voluntarily requested the reduction of their 2020 long-term share awards, the carrier said in a statement on Wednesday. They asked for the cut to reflect the change in Vodafone’s share price, which has fallen about 14% this year after tumbling by around a third in 2018.
Read is giving up about £1.3m in stock, reducing his share bonus to about £5.1m, according to Bloomberg calculations based on current market prices.
The move heads off a potential showdown with investors at the company’s annual shareholder meeting on July 23. Institutional Shareholder Services, one of the most influential proxy advisers, had recommended that Vodafone shareholders reject the company’s remuneration report.
'Insane' compensation package
Vodafone’s decision reflects growing scrutiny over high executive pay. The CEO of UK builder MJ Gleeson, Jolyon Harrison, stepped down last month after a dispute over remuneration. Abigail Disney, whose grandfather and great-uncle founded Walt Disney, earlier this year called CEO Bob Iger’s $65.6m compensation package "insane".
The Institutional Voting Information Service, a UK researcher that represents investors managing over £7.7trn for their clients, updated its rating of Vodafone, from an amber to an improved blue, following the company’s announcement. ISS is working on an alert in the light of the new information from Vodafone, a spokesperson said, declining to be more specific.
The threshold level of vesting is more than Read’s base salary of about £1m, ISS said in a report published July 8. Rival shareholder advisory group Glass Lewis also expressed reservations at the remuneration plans, though advised investors that the proposal was "supportable".
A number of companies including Ocado and Standard Chartered are included in the Investment Association’s "Public Register", which lists firms that report shareholder revolts of more than 20% on any of their resolutions.
"We have seen a dramatic improvement in companies acknowledging shareholder dissent and committing to respond to it," Andrew Ninian, a spokesman for the Investment Association, wrote in an email.