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Vodafone has signalled it is likely to increase the number of executive directors on its board, in a move that could defuse tensions with investors ahead of the UK mobile phone company’s annual meeting on July 25.

Arun Sarin, Vodafone’s chief executive, has reassured shareholders that the company has no plans to create a US-style board with just two or three executive directors.

He has indicated he expects the number of executive directors to increase and acknowledged that Bill Morrow and Paul Donovan, heads of Vodafone’s operations in Europe and emerging markets respectively, could be candidates to join the board.

In May Vodafone reported a record loss of £14.9bn ($27.5bn) for its 2006 fiscal year, and Mr Sarin’s comments were made during briefings with investors following the results.

Investors are considering voting against the re-election of some of Vodafone’s directors, including Mr Sarin, at the annual meeting in protest at the company’s deteriorating performance and fears that the board does not contain enough people willing to challenge the chief executive’s strategy.

Mr Morrow is leading efforts to reverse declining revenue growth in Vodafone’s core European markets and is seen by investors as a possible successor to Mr Sarin.

Sir John Bond, who is due to become Vodafone’s chairman on July 25, will this week start a series of consultations with investors. The former HSBC chairman will conduct a wide ranging review of Vodafone’s board in the coming months.

People close to Vodafone said no decisions had been taken on the future make-up of the board, and that Mr Sarin accepted that appointments were a matter for Sir John and the company’s nominations committee.

However, Mr Sarin was pressed by investors as to whether Vodafone was seeking to create a US-style board, where often the only executive directors are the chief executive and chief financial officer.

The number of executive directors on Vodafone’s board is dropping from five to three because Peter Bamford, chief marketing officer, left the company in April, and Sir Julian Horn-Smith, deputy chief executive, is retiring.

In May Mr Sarin announced plans for Vodafone to move beyond its mobile-centric past by offering broadband services over landlines.

Some investors have questioned whether Vodafone needs more executive directors on the board so that its non-executive directors can get greater information about the company’s strategy and, if necessary, challenge Mr Sarin.

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