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Wednesday, 19 June, 2002, 09:26 GMT 10:26 UK
Vodafone risks fury over boss's pay
vodafone shop
Vodafone shares tumbled last year as the losses stacked up
Telecoms giant Vodafone has defied hard-hit shareholders by handing a generous pay award to chief executive Sir Christopher Gent.

Sir Christopher was paid 2.42m last year - a period in which Vodafone racked up the largest loss in UK corporate history - the company said in its annual report.

Vodafone Apr 01-Mar 02
13.5bn loss
Shares drop 33%
Chris Gent paid 2.4m
He has also received Vodafone shares worth about 1.5m as the second part of a controversial bonus package, a separate statement on Wednesday revealed.

The awards risk angering investors who have seen Vodafone stock from a peak of 400p two years ago, at the height of the dot.com bubble, to a closing price of 93.25p on Tuesday.

Vodafone last month announced a loss of 13.5bn, the largest in UK corporate history.

Slimmer cats

Concerns over Sir Christopher's package have also fuelled a widespread debate over directors' pay, and whether captains of industry are held sufficiently accountable for company performance.

In Germany, Deutsche Telekom, which has seen its shares hit a series of record lows in recent weeks, on Tuesday bowed to shareholder pressure by saying it would not grant stock options to board members this year.


We have sought to align... executive incentives with the interests of shareholders

Vodafone

In the aviation sector, British Airways boss Rod Eddington is believed to have had his total salary cut from 751,000 to 497,000 last year, when the carrier recorded a 200m loss.

But Vodafone responded to critics by revealing tougher targets before directors' share options and bonus packages kick in.

Penny Hughes, chairman of Vodafone's remuneration committee, said: "We have sought to make the remuneration policy more transparent, aligning the business strategy and executive incentives with the interests of shareholders."

The company also insisted that Sir Christopher was still paid less than the heads of top European companies, who earned 3.4-9.3m.

And Vodafone has argued that the fall in its share price reflects poor investor perception of telecoms firms, rather than strategic errors by managers.

'Targets hit'

The 1.5m share bonus package represents the second tranche of a package proposed after Vodafone two years ago sealed the takeover of German rival Mannesmann.

Many investors at the time argued that Sir Christopher's bonus, which also included a 5m cash payment, should more strongly reflect the firm's long term performance, rather than just success in the takeover.

Vodafone has achieved earnings growth targets since 2000, a spokesman said.

Last year, Vodafone chairman Sir Christopher Gent picked up a total of nearly 6m in pay and bonuses, prompting many shareholders to abstain from voting for his remuneration package at their annual meeting.

Vodafone shares were 1.5p lower at 92p in morning trade in London on Wednesday.

 WATCH/LISTEN
 ON THIS STORY
Will Hutton, director, Work Foundation
"One has to reorganise the way we govern companies"
See also:

16 Jun 02 | Business
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03 May 02 | Business
26 Apr 02 | Business
13 Feb 02 | Science/Nature
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