Tuesday 23 July 2019 4:00 pm

Vodafone chairman defends dividend cut as firm fends off pay revolt

Vodafone has defended its controversial decision to slash its dividend as the firm fended off threats of a shareholder revolt.

Chairman Gerard Kleisterlee admitted the last year had been a “low point” for Vodafone and the industry as a whole, but insisted the decision to slash the payout had not been taken lightly.

Read more: Vodafone gets the green light for $22bn Liberty Global acquisition

Vodafone cut its dividend by 40 per cent earlier this year in a bid to free up finances after hefty investments in 5G networks pushed the firm to a full-year loss of €7.6bn (£6.8bn).

It is the first time the company has slashed its payout, and comes after a share price drop of more than 25 per cent over the last 12 months.

The disappointing performance has fuelled discontent among shareholders, and a report by proxy adviser ISS previously recommended that investors vote down the firm’s remuneration report.

But chief executive Nick Read and chief financial officer Margherita Della Valle both agreed to cut their share bonuses by 20 per cent, prompting ISS to reverse its guidance.

Investors voiced their anger at both the dividend cut and the pay proposals at the firm’s annual general meeting (AGM) in London today.

During an animated exchange, one shareholder slammed board members for the company’s payout, branding it “absolutely lacklustre”.

Vodafone did not emerge unscathed from the AGM, as more than 12 per cent of shareholders voted against the executive pay proposals. However, both the remuneration report and the dividend cut were passed.

The EU last week gave the green light for Vodafone’s $22bn (£17.6bn) takeover of Liberty Global assets in Germany, the Czech Republic, Hungary and Romania.

Read more: Shareholders poised to oppose Vodafone pay report in dividend row

Chairman Kleisterlee said the merger would help drive growth and boost shareholder returns in the future.

Kleisterlee, who is approaching the end of his nine-year tenure, said Vodafone is currently interviewing candidates for his successor. 

Main image credit: Getty