Friday 12 July 2019 12:33 am

Vodafone rings cynical tone with token gesture on executive pay

Talk about a late call. By the time Vodafone signalled a concession this week over long-term share awards granted to its top executives, the damage had already been done.

The “voluntary request” (a phrase underlining the City’s talent for tortured tautology) made by Nick Read and Margherita Della Valle has stuck in the craw of some shareholders.

The timing of their offer to forfeit 20 per cent of the Ltip awards granted last month came hours after reports of ISS’s recommendation that shareholders vote against Vodafone’s remuneration report later this month.

Why not do it sooner? There have been pay rows aplenty in the City this year, but for a sheer absence of common sense, the mobile communications giant’s tin-eared approach trumps virtually all of its peers.

Vodafone shares, remember, are down by almost a third during the past year, while investors have also been forced to stomach the prospect of a 40 per cent cut to the dividend.

That’s partly to help finance the company’s acquisition of Liberty Global assets in Germany and eastern Europe, and partly a tacit acknowledgment that “progressive” payouts to shareholders are frequently unsustainable.

All of this comes as Vodafone progresses its search for a new chairman to replace Gerard Kleisterlee.
Investors will be recalibrating their expectations of his successor, and asking why board members had not been more proactive in heading off the rebellion that now looms in just under a fortnight.

As for the executives’ gesture to forfeit part of their bonuses, I suspect it won’t be enough to mollify those investors still fuming at Vodafone’s dividend cut. Directors should prepare to commit to further “voluntary requests” at what could be a heated annual general meeting.

Deputy heads roll at M&S

It’s back to square one for Steve Rowe, Marks & Spencer chief executive, who has inherited the leadership of its clothing business for the second time following yesterday’s defenestration of Jill McDonald.

It’s hard not to feel some sympathy for the former Halfords boss, who joined to great fanfare but with little experience of either fashion or M&S’s peculiarly bureaucratic culture.

Rowe’s version of “deputy heads must roll” will do little to reassure M&S’s long-suffering investors, though, that solutions to its perennial problems of range and availability will be found.

That leaves the chief executive himself vulnerable to being deposed if the performance of the clothing business does not improve by Christmas. But saying that about M&S chief executives is a wearily familiar routine.

Cenkos’ broker clock

The clock continues to tick. I last wrote here in March about hapless City broker Cenkos Securities’ efforts to bring former chief executive Jim Durkin back to the helm.

At the time, it was 144 days since his appointment had been announced, far exceeding the standard 90-day period for the Financial Conduct Authority (FCA) to consider Cenkos’ application.

It turns out that that was nowhere near enough. Here we are, another 104 days on, and still no news about Durkin’s comeback

It’s arguable that this vacuum constitutes a false market in Cenkos shares, given the importance of a rainmaker such as its former boss.

The latest suggestion is that Cenkos is now formulating a back-up plan that involves appointing another veteran of the firm, Joe Nally, as the permanent successor to Anthony Hotson instead.

To outside investors, Nally may resemble an identikit of Durkin: a veteran Cenkos employee who lacks the desire to think afresh about the firm’s future in a sector requiring a dose of realism.

The broker refuses to disclose whether it has imposed a deadline of its own on FCA approval for Durkin. In the meantime, Hotson’s impatience to hold his retirement party must be unbearable.

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