Sir John Bond, new chairman of Vodafone, on Tuesday expressed support for Arun Sarin, but cautioned his performance would be under “constant review”.
Mr Sarin suffered embarrassment when investors with 15 per cent of Vodafone’s shares either voted against his re-election as chief executive or abstained at the mobile phone company’s annual meeting. It is thought to be the biggest protest against a Vodafone director to date.
The company suffered further discomfort when investors holding 20.2 per cent of its shares voted against its remuneration policy or abstained.
Sir John said he “subscribed” to comments by Lord MacLaurin, Vodafone’s outgoing chairman, who voiced strong support for Mr Sarin but warned he had to deliver results on the company’s new strategy.
Some of Vodafone’s big investors critical of Mr Sarin look to Sir John, former chairman of HSBC, for a swift review of the board, and to decide whether to replace the chief executive. Sir John said: “Wherever you work in the world, the performance of management is under constant review.”
Mr Sarin’s re-election as chief executive was opposed by three of Vodafone’s top 10 investors: Hermes Pension Management, Morley Fund Management and Standard Life Investments. Some big investors also abstained.
Some investors have become increasingly critical of Mr Sarin since Vodafone warned last November of slowing revenue growth and reduced profit margins. In May it announced a record pre-tax loss for its 2006 fiscal year of £14.9bn.
Mr Sarin, who insisted he was listening to investors, said: “85 per cent of the people who voted said ‘the strategy of the firm, the direction of the firm, is fine’.”
Investors complained about Vodafone’s remuneration policy because it plans to cut the earnings growth targets that management must hit for share option awards from 8 to 16 per cent in 2006 to 5 to 10 per cent for 2007.
Investors with 6 per cent of Vodafone’s shares voted against re-election of Luc Vandevelde, chairman of the remuneration committee, or abstained.
Standard Life, which voted against Vodafone’s remuneration policy, said its stance reflected “the importance we attach to leadership at Vodafone and our concerns about Vodafone’s remuneration policies, which in our opinion provide significant rewards for achieving unchallenging performance conditions”.
Insight Investment Management, another of Vodafone’s top 10 investors, backed Mr Sarin.
Vodafone shares closed ½p higher at 115.75.