Shareholders 'could oppose Vodafone chief re-election'

The boss of mobile phone giant Vodafone was today facing the prospect of a major shareholder vote against his re-election to the board.

Arun Sarin could see the owners of more than 10% of the company’s shares oppose his appointment, in what The Sunday Times said represented an “unprecedented” level of opposition for a leading British company.

The protest vote at Tuesday’s annual meeting in London follows Vodafone’s warning last year of slowing revenue growth, while in May it announced losses of £14.9bn (€21.8bn) following a £28bn (€41bn) write-down on its assets.

Even though shareholders have received dividend and cash returns worth £19bn (€27.8bn), shares have fallen to 111.25p from 150p in November.

Morley Fund Management, which owns a 2% stake in the company worth more than £1bn (€1.5bn), said on Friday it would vote against the re-appointment of Mr Sarin, as well as other non-executive directors.

It was reported by The Sunday Telegraph that fellow fund-manager Hermes will follow suit and use its £750m (€1.1bn) holding to voice discontent with the company’s management.

The AGM will give shareholders the opportunity to lobby former HSBC chief Sir John Bond, who takes over from Lord MacLaurin as Vodafone’s non-executive chairman at the meeting.

He is expected to oversee a review of the company’s board, including non-executive directors, in the coming months.

Meanwhile, an even larger number of shareholders, estimated at around 15%, are forecast to vote against the company’s remuneration report, which reduces the performance hurdle required for directors to qualify for share options.

The new target cuts the requirement for earnings per share growth from between 8% and 16% to a range of 5% to 10% per annum.

PIRC, the voting advisory service, said in a note last week: “Shareholders may wonder whether such weaker targets are in their best interest, particularly given the company’s recent share price performance and ongoing uncertainties regarding the company’s strategy.”

Vodafone now forecasts revenues growth of between 5% and 6.5% in the year to March 31, 2007, as it faces up to the impact of competitive pressures on its key markets of the UK, Germany and Italy. It will provide an update on its first-quarter trading performance tomorrow.

Mr Sarin, who has been at the helm for three years, has ruled out further big-money acquisitions as he looks to drive value from existing assets and tackle the broadband and landline markets.

The American has warned that the company will need to cut costs if it is to counter slowing revenue growth and push into lower-margin activities.