NAPF urges Vodafone voting abstention
The National Association of Pension Funds' Voting Issues Service (VIS)
was at the centre of a corporate governance storm last week over a bonus
payment to Vodafone's chief executive, Chris Gent.
With the recent
introduction of its voting issues template giving voting recommendations to
subscribers, the VIS has put itself in the spotlight. It recommended that
voters abstain on the issue of remuneration, as a mark of dissatisfaction over
the bonus payout to Gent for the successful completion of the
Vodafone/Mannesmann deal.
However, the VIS said the deal had not yet been
proved through share performance. Chris Baldry, manager of the VIS, said: "We
wouldn't expect recommendations like this to be a regular occurrence and
certainly there won't be any more in the near future. We don't use them
lightly."
Vodafone's remuneration committee justified the bonuses, saying
executives should be rewarded for previous performance of the company and its
transformation into a global giant.
It stated that no more bonuses would be
paid to senior executives once its new remuneration policy was adopted.
However, Pensions Investment Research Consultants (Pirc), said this commitment
was already in the company's annual report.
Pirc is at odds with the VIS,
recommending to its institutional shareholder clients that they vote against
the remuneration package (PW 26.6.00). Stuart Bell, Pirc research director,
said: "Shareholders should focus on the new pay package. They are being asked
to approve it sight unseen and give complete flexibility to the remuneration
committee which has paid these special bonuses will implement the new policy
rigorously?"
Sarah Wilson, managing director of the voting agency
Manifest, said once fund managers engage properly with companies on
corporate governance issues public rows like this should not happen.
She
believes that in the long term international corporate governance rules have to
be established. Running global companies like Vodafone often means bringing
together corporate governance practices from different cultures which
inevitably creates problems.
By Karen Talbot, Pensions Week
17 July, 2000
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