Approval likely for Gent's salary

Despite  opposition from several large investors, Vodafone shareholders look likely to approve Sir Christopher Gent's controversial remuneration package at the annual meeting later today, writes Jane O'Sullivan.

The package would see the Vodafone chief executive awarded more than nine million share options, and performance and bonus shares up to a further £3.9 million sterling (€6.2 million) on top of a basic salary of £1.2 million.

The payout, for a year when Vodafone racked up Britain's biggest corporate loss, has angered shareholders who have seen the value of their shares halve since January.

From a peak of 399 pence sterling, the shares are now trading at around 98 pence.

This has prompted some British funds to take a stand against what they see as excessive remuneration for executives.

But Vodafone argues that the pay of European executives is dwarfed by the packages received by heads of US corporations and that European companies must offer competitive pay to attract top talent.

Vodafone has around 450,000 Irish shareholders who got the shares after Eircom's mobile phone subsidiary, Eircell, was demerged and sold to the British phone giant.

Eircom shareholders got 0.9478 Vodafone shares for every two Eircell 2000 shares they held. At the time the deal was first mooted, Vodafone shares were worth £2.45 sterling although they had fallen to £1.96 sterling by the time it was eventually struck, leaving Irish shareholders sitting on losses of around 50 per cent.

Some Irish institutional investors also hold Vodafone shares but mainly in their British equity portfolios as the stock accounts for around 6 per cent of the FTSE 100.

Most institutions that inherited Vodafone shares from their Eircom interests have since disposed of them. Views are mixed among the Irish institutions that own the stock.

Some, such as Canada Life-owned Setanta Asset Management, have indicated they will vote against Mr Gent's package. But others intend to back it.

Irish Life Investments Managers (ILIM), which holds Vodafone shares in its UK equity portofolio, said yesterday it would not vote against Mr Gent's package.

"We are more interested in the underlying business, in revenue numbers and customer numbers such as average revenue per user," said Irish Life's Mr Eugene Kiernan.

On Monday, the company, which is Europe's biggest mobile phone operator, reported first-quarter gains in revenue per user in two of its main markets - Germany and Britain - along with a welcome surge in US subscriber growth.

Meanwhile, British fund managers noted that the remuneration policy to be presented today is substantially improved on what it was two years ago in terms of the performance indicators used.

"They have finally taken heed of what institutional investors are saying," said one Edinburgh-based fund manager, adding that he expected the vote to be passed "quite comfortably".