The chief executive of Vodafone has become one of the country’s best-paid business leaders after an enormous share award boosted his total pay packet to £14 million.
The £11 million in shares that Vittorio Colao will pick up on June 30 is partly the result of Vodafone’s strong performance against rivals more exposed to the eurozone crisis.
However, it could anger shareholders who are riding a wave of indignation at executive pay dubbed the “Shareholder Spring”.
Mr Colao was paid £3 million in salary and short-term bonuses in the year to March, up from £2.8 million the previous year. He will receive his share reward in June after the company smashed targets set in 2009. He was given £3.7 million in long-term incentive share awards last June.
The incentive plan — called the GLTI — is based on measures including free cashflow and returns to investors, which have been amplified by the rise in the share price from 114p in the summer of 2009 to 174p yesterday.
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On those numbers, the performance of the business has been robust since Mr Colao took the helm in July 2008. The company argued that £41 billion of value had been created during the near-four-year period. Its market value has grown by £14.9 billion since 2008, it has paid out more than £19 billion in dividends and returned £6.7 billion to investors via share buybacks.
However, the GLTI also measures the performance of the British company against its main rivals, including Deutsche Telekom, France Télécom, Telefónica, Telecom Italia and the local rival BT. The Times revealed this week that Vodafone’s market value had surpassed that of Deutsche Telekom, France Télécom and Telefónica for the first time.
That has made Mr Colao an indirect beneficiary of the eurozone crisis, because the value of the company has been magnified against rivals that have a larger exposure to the economic crisis in Southern Europe. Vodafone has been hit, as it has large operations in Spain, Italy, Greece and Portugal, but its global scale stretching from the United States to India to Australia has helped to buffer it against the turmoil.
Andy Halford, the chief financial off-icer, will receive shares worth £7.2 million, against £2.3 million in 2011, while the outgoing head of Europe Michel Combes will receive £5.7 million, compared with £1.8 million last year.
Vodafone has already sounded out a number of large shareholders over the remuneration package and is understood to not have encountered any criticism. It pointed out that 96 per cent of shareholders had approved the company’s remuneration report at last year’s annual meeting.
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Nevertheless, the mobile company has moved to ensure that 2012 will be a peak year for pay, after pledging that none of its executives will receive a rise for the coming year. It has also reduced the maximum payout from its long-term incentive plan, from four times the target value to three times.
Mr Colao has promised not to sell the £11 million of shares that he will be handed this time for two years. Other executives have pledged to hold on to at least half of the bonus shares for the same period.
Mr Colao already owned shares worth £22 million courtesy of previous GLTI awards. This is the first year the scheme will pay out in full. It paid out 30 per cent in 2011, 25 per cent in 2010 and nothing in 2009.
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£9.5bn pre-tax profit in year to March 31
404m worldwide customer base
£46bn revenues
£15bn proceeds of disposals
Source: Times research