Vodafone chief Vittorio Colao takes £2m pay cut

Vittorio Colao, the chief executive of Vodafone, saw more than £2m wiped off his remuneration last year as the mobile operator struggled in European markets.

The Italian’s total package for came in at £8.9m, compared with £11m for the previous year, Vodafone disclosed in its annual report yesterday.

The reduction was driven by the company’s long-term incentive scheme, which is pegged to its free cash flow and total returns to shareholders. It paid Mr Colao £6.5m in shares, compared with £8.9m in the previous year, as cash flow fell from £5.6bn to £4.4bn amid touch economic conditions across southern Europe and intense price competition in major markets such as Germany.

All the group’s non-executive directors received 37pc of maximum they are allowed under the long-term incentive scheme, down from 56pc.

Mr Colao has warned investors that free cash flow will come down further over the next few years as a result of the group’s £19bn 'Project Spring’ network upgrades around the world, announced last year. However, his pay package will not be directly affected, as the Vodafone remuneration committee agreed to exclude the impact of the capital investment programme on free cash flow targets “to ensure an appropriate comparison to the original targets that were set”.

Vodafone will hope to avoid being caught up in the revival of shareholder protests against executive pay at FTSE 100 companies at its AGM next month. In recent months AstraZeneca, Barclays and Pearson have seen significant revolts against their remuneration reports, although none have been rejected.

The mobile operator is likely to highlight that fact that Mr Colao holds more than nine million shares worth nearly £21m and has not sold any since becoming chief executive in 2008, other than to pay personal tax, as evidence of his alignment with shareholder interests.

Vodafone released its annual report on the same day it published its first ever report on surveillance of its networks and customers by intelligence agencies. It called for more transparency and for laws to require that authorities obtain a warrant before they can demand access to phone and internet traffic.

Stephen Deadman, Vodafone’s privacy officer, said: We are making a call to end direct access as a means of government agencies obtaining people’s communication data.

“If we receive a demand we can push back.”

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