Directors’ remuneration

Dear Shareholder

This year the work of the Remuneration Committee took place against a background of very challenging business conditions in the global economy. In this environment the Committee maintained its focus on ensuring that the Company’s remuneration policies in general, and the packages of the executive directors in particular, were designed to allow the Company to recruit, retain and motivate its talented people and to ensure those people were fully incentivised to maximise shareholder value.

At the start of the year a key focus for the Company was the generation of cash flow. This was reflected in the weighting applied to this measure in the short-term plan. As the focus now moves more to growing revenue and market share the weightings have been modified for the coming year to appropriately reflect this change.

The structure of the long-term plan has also been reviewed and the Committee believes that the current design remains appropriate with its strong continued focus on both cash flow and total shareholder return.

As well as considering the current package, the Remuneration Committee continues to monitor how well incentive awards made in previous years align with the Company’s performance. In this regard, the Committee is confident that there is a strong link between performance and reward.

The Remuneration Committee has appreciated the dialogue and feedback from investors and has taken account of their views when reviewing the incentive designs. This has been seen in two ways: i) in the alignment of the senior leadership population with the Board and the Executive Committee through the cascading down of the free cash flow performance condition in the long-term plan; and ii) in the greater differentiation that has been built into both short and long-term plans with individual performance being more rigorously measured and directly affecting award sizes. The Committee will continue to take an active interest in investors’ views and the voting on the remuneration report. As such, it hopes to receive your support at the AGM on 27 July 2010.

Luc Vandevelde

Chairman of the Remuneration Committee
18 May 2010

Remuneration Committee

The Remuneration Committee is comprised to exercise independent judgement and consists only of independent non-executive directors. For further details, the terms of reference can be found here.

Remuneration Committee

Chairman Luc Vandevelde
Committee members Simon Murray
  Anthony Watson
  Philip Yea

Management attendees

Chief Executive Vittorio Colao
Group HR Director Ronald Schellekens
Group Reward Director Tristram Roberts (until 31 October 2009)
Head of Group Reward Adam Parsons (1 November 2009 to 31 March 2010)

External advisors

During the year Towers Watson supplied market data and advice on market practice and governance. PricewaterhouseCoopers LLP provided performance analysis and advice on plan design and performance measures. Both advisors were appointed by the Remuneration Committee in 2007.

The advisors also provided advice to the Company on general human resource and compensation related matters. In addition, PricewaterhouseCoopers LLP also provided a broad range of tax, share scheme and advisory services to the Group during the 2010 financial year.

As noted in his biographical details, during the year Philip Yea joined an advisory board for PricewaterhouseCoopers LLP. In light of their role as advisor to the Remuneration Committee on remuneration matters, this appointment was considered by the Committee and it was determined that there is no conflict or potential conflict arising.


The Remuneration Committee had five meetings during the year.

Overview of remuneration philosophy

Remuneration policy

The Remuneration Committee commissioned a full review of the reward arrangements for the Company’s executive directors in the 2008 financial year and the remuneration policy was last updated at this point. The policy is felt to be appropriate for the coming financial year.

Vodafone wishes to provide a level of remuneration which attracts, retains and motivates executive directors of the highest calibre. To maximise the effectiveness of the remuneration policy careful consideration will be given to aligning the remuneration package with shareholder interests and best practice.

The aim is to target an appropriate level of remuneration for managing the business in line with the strategy. There will be the opportunity for executive directors to achieve significant upside for truly exceptional performance.

In setting total remuneration the Remuneration Committee will consider a relevant group of comparators which will be selected on the basis of the role being considered. Typically no more than three reference points will be used. These will be as follows: top European companies, top UK companies and, particularly for scarce skills, the relevant market in question.

These comparators reflect the fact that currently the majority of the business is in Europe, the Company’s primary listing is in the UK and that the Remuneration Committee is aware that, in some markets, the competition is tough for the very best talent.

A high proportion of total remuneration will be awarded through short-term and long-term performance related remuneration. The Remuneration Committee believes that incorporating and setting appropriate performance measures and targets in the package is paramount – this will be reflected in an appropriate balance of operational and equity performance.

Finally, to fully embed the link to shareholder alignment, all executive directors are expected to comply with the rigorous and stretching share ownership requirements set by the Remuneration Committee.

Summary of key reward philosophies

Link to business strategy
  • Performance conditions have been determined to align with business strategy and to maximise shareholder value.
  • The annual bonus continues to support the short-term operational performance of the business by measuring against the business fundamentals of revenue, profit, cash flow and competitive performance.
  • The long-term incentive measures performance against:
    • free cash flow, which is believed to be the single most important operational measure; and
    • total shareholder return (‘TSR’) relative to our key competitors.
Shareholder alignment
  • The executives are required to meet stretching share ownership requirements which are supported by the opportunity to invest into the long-term incentive plan.
  • The performance conditions on the long-term incentive plan are there to underpin shareholder value creation.
Risk and reward
  • In setting the balance between base salary, annual bonus and long-term incentive levels, the Remuneration Committee has considered the risk involved in the incentive schemes and is satisfied that the following design elements mitigate the principal risks:
    • the heavy weighting towards long-term incentives;
    • the need for short-term incentive payouts to be used to purchase and hold investment shares in order to fully participate in the long-term arrangements; and
    • the enhanced weighting on non-financial measures in the short-term plan.
  • The Remuneration Committee will continue to consider the risks involved in the incentive plans on an on-going basis.

Changes to plans for the 2011 financial year

The table below sets out any changes to the individual elements of the reward package for the 2011 financial year:

Reward elements 2011 financial year
Base salary No change to the benchmarking policy.
Annual bonus There has been a re-balancing of the weighting for the performance measures to focus on service revenue. A competitive performance assessment has been introduced which incorporates net promotor score and in some markets customer delight index.
Long-term incentive plan No change to the plan design.
Investment opportunity No changes to the level of investment an individual may make.

Setting remuneration levels

The remuneration package for executive directors is benchmarked by reference to total data for the base salary, annual bonus and long-term incentive levels combined. The principal comparator group (used for benchmarking only) is made up of 28 top European companies excluding any in the financial services sector.

When undertaking the benchmarking process the Remuneration Committee makes assumptions that individuals will invest their own money into the long-term incentive plan. This means that individuals will need to make a significant investment in order to achieve a market competitive level of remuneration.

Comparison of the ratio of fixed pay to variable pay

The base salary and pension contributions to executives are considered to be fixed levels of remuneration. The annual bonus and the long-term incentive awards are variable, i.e. the actual value the executive receives will depend on the performance of the Company.

As can be seen below the variable elements of the executive directors remuneration package are in excess of 77% assuming target performance, maximum co-investment and no movement in current share price.

Analysis of executive directors pay as a percentage of total package

Chief Executive

Other executive directors

analysis-chieft-exec analysis-exec-directors

The remuneration package

The table below summarises the plans used to reward the executive directors in the 2010 financial year.

  Summary Grant policy
Base salary    
  • Set by the Remuneration Committee as part of the overall benchmarking process.
  • Benchmark assumed to be the market level for the role.
  • Base salaries set annually on 1 July.
Annual bonus
Group Short-Term Incentive Plan (‘GSTIP’)(1)

Remuneration Committee reviews performance against targets over the financial year. Actual results measured against the budget set at the start of the year.

Summary of the plan in the 2010 financial year
  • 2010 performance measures:
    • Three key financial measures: operating profit (25%), service revenue (25%) and free cash flow (35%); and
    • Customer delight (15%) – customer satisfaction is a key component in the Group’s success.
Changes for the 2011 financial year
  • Performance measures for the 2011 financial year:
    • Rebalance of weightings to focus on service revenue to stimulate top line growth;
    • Introduction of a competitive performance assessment to include customer satisfaction; and
    • Split of measures for the 2011 financial year: operating profit (20%), service revenue (30%), free cash flow (20%) and competitive performance assessment (30%).
  • Bonus levels reviewed annually. Mix of performance measures and the performance targets also reviewed.
  • Annual bonus paid in cash in June each year for performance over the previous financial year.
  • Target bonus is 100% of base salary earned over the financial year.
  • Maximum bonus is 200% of base salary earned and is only paid out for exceptional performance.
Long-term incentives
Global Long-Term Incentive Plan (‘GLTI’) base awards
  • Long-term incentive all delivered in performance shares.
  • Base award has vesting period of three years, subject to a matrix of two performance measures over this period:
    • Firstly, an operational performance measure (free cash flow); and
    • Secondly, an equity performance multiplier (relative TSR).
  • Performance details set out in more detail below.
  • Base award set annually and made in June.
  • The Chief Executive’s base award will have a target face value of 137.5% of base salary (maximum 550%) in June 2010.
  • The base award for other executive directors will have a target face value of 110% of base salary (maximum 440%) in June 2010.
Co-investment matching awards
  • Individuals may purchase Vodafone shares and hold them in trust for three years in order to receive additional performance shares in the form of a GLTI matching award.
  • Matching awards made under the GLTI plan have the same performance measures as the base award.
  • Matching award used to encourage increased share ownership and supports the share ownership requirements set out below.
  • Matching award made annually in June in line with the investment made.
  • Executive directors can co-invest up to two times net base salary.
  • Matching award will have a face value equal to 50% of the equivalent multiple of gross basic salary invested.
Share ownership requirements
  • Option to co-invest into the GLTI plan designed to encourage executives to meet their share ownership requirements.
  • Ownership against the requirements must be met after five years.
  • Progress towards this requirement reviewed by the Remuneration Committee before granting long-term awards.
  • The Chief Executive is required to hold four times base salary.
  • Other executive directors are required to hold three times base salary.
Other remuneration
Defined benefit pension
  • The Chief Financial Officer is a member of the UK defined benefit scheme for pensionable salary up to the scheme cap of £110,000. Details of this are set out in the pensions table. He receives the cash allowance set out below on pensionable salary over the scheme cap.
  • The Chief Financial Officer is the only executive director to receive this benefit.
  • The UK defined benefit scheme closed to future accrual by existing members on 31 March 2010.
Defined contribution pension/cash allowance
  • The pension contribution or cash allowance is available for the executives to make provisions for their retirement.
  • 30% of basic salary taken either as a cash payment or a pension contribution.
  • Company car or cash allowance worth £19,200 per annum.
  • Private medical insurance.
  • Chauffeur services, where appropriate, to assist with their role.
  • Benefits reviewed from time to time.
GSTIP targets are not disclosed as they are commercially sensitive.

Details of the GLTI performance shares

The number of shares vesting depends on the performance of two measures: free cash flow and relative TSR. This section sets out how the performance of each of the two measures is calculated.

Underlying operational performance – adjusted free cash flow

The free cash flow performance is based on a three year cumulative adjusted free cash flow figure. The definition of adjusted free cash flow is reported free cash flow excluding:

  • Verizon Wireless additional distributions;
  • Foreign exchange movements over the performance period; and
  • Material one-off tax settlements.

The cumulative adjusted free cash flow target and range for awards in the 2011, 2010 and 2009 financial years are set out in the table below:

    2011     2010     2009
Performance £bn Vesting
  £bn Vesting
  £bn Vesting
Threshold 17.50 50%   15.50 50%   15.50 50%
Target 20.50 100%   18.00 100%   17.50 100%
Superior 21.75 150%   19.25 150%   18.50 150%
Maximum 23.00 200%   20.50 200%   19.50 200%

The target free cash flow level is set by reference to the Company’s three year plan and market expectations. The Remuneration Committee consider the 2011, 2010 and 2009 targets to be stretching ones.

TSR out-performance of a peer group median

We have a limited number of appropriate peers and this makes the measurement of a relative ranking system volatile. As such, the out-performance of the median of a peer group is felt to be the most appropriate TSR measure. The peer group for the performance condition for the 2011, 2010 and 2009 financial years is:

  • BT Group;
  • Deutsche Telekom;
  • France Telecom;
  • Telecom Italia;
  • Telefonica; and
  • Emerging market composite (consists of the average TSR performance of Bharti, MTN and Turk).

The relative TSR position will determine the performance multiplier. This will be applied to the free cash flow vesting percentage. There will be no multiplier until TSR performance exceeds median. Above median the following table will apply to the 2011, 2010 and 2009 financial years (with linear interpolation between points):

of peer group
Median       0.0% p.a. No increase
65th percentile       4.5% p.a. 1.5 times
80th percentile (upper quintile)       9.0% p.a. 2.0 times

The performance measure has been calibrated using statistical techniques.

Combined vesting matrix

The combination of the two performance measures gives a combined vesting matrix as follows:

  TSR performance
Free cash flow measure Up to median 65th 80th
Threshold 50% 75% 100%
Target 100% 150% 200%
Superior 150% 225% 300%
Maximum 200% 300% 400%

The combined vesting percentages are applied to the target number of shares granted.

The free cash flow performance is externally verified and approved by the Remuneration Committee. The performance assessment in respect of the TSR out-performance of a peer group median is undertaken by PricewaterhouseCoopers LLP.



Awards made to executive directors during the 2010 financial year

Reward elements Vittorio Colao Andy Halford Michel Combes Stephen Pusey
Base salary Vittorio’s base salary was not increased from £975,000 in July 2009. Andy’s base salary was not increased from £674,100 in July 2009. Michel’s base salary increased from £720,000 to £740,000 on 1 June 2009 on promotion to the Board. Stephen’s base salary increased from £445,200 to £500,000 on 1 June 2009 on promotion to the Board.
Annual bonus The target bonus was £975,000 and the maximum bonus was £1,950,000. The target bonus was £674,100 and the maximum bonus was £1,348,200. The target bonus was £736,667 and the maximum bonus was £1,473,334. The target bonus was £490,867 and the maximum bonus was £981,734.
Long-term incentive plan In June 2009 the base award for the Chief Executive had a face value of 137.5% of base salary at target. In July 2009 the base award for the Chief Financial Officer had a face value of 110% of base salary at target. In June 2009 the base award for the Chief Executive, Europe had a face value of 110% of base salary at target. In June 2009 the base award for the Chief Technology Officer had a face value of 110% of base salary at target.
Investment opportunity Vittorio invested 55% of the maximum into the GLTI plan (529,098 shares) and therefore received a matching award with a face value of 55% base salary at target. Andy invested 73% of the maximum into the GLTI plan (486,146 shares) and therefore received a matching award with a face value of 73% base salary at target. Michel invested 21% of the maximum into the GLTI plan (156,014) shares and therefore received a matching award with a face value of 21% base salary at target. Stephen invested 30% of the maximum into the GLTI plan (147,896 shares) and therefore received a matching award with a face value of 30% base salary at target.

Amounts executive directors will actually receive in the 2011 financial year

As previously explained a very large percentage of the executive directors’ package is made up of variable pay subject to performance. The information below explains what the executive directors who were on the Board on 31 March 2010 will actually receive from awards made previously with performance conditions which ended on 31 March 2010 but that will vest in the 2011 financial year.

As previously noted there were no salary increases, other than for promotions, for the executive directors during the 2010 financial year. However the Remuneration Committee felt that it was appropriate to review base salary levels for the 2011 financial year. Accordingly, the new salaries shown below will become effective 1 July 2010. In the case of Vittorio Colao this is his first increase since his promotion to the role of Chief Executive two years ago and reflects his outstanding leadership of the Company in a very difficult environment.

The executive directors 2009/10 GSTIP is payable in June 2010 with actual payments detailed in the table below. Vittorio Colao, Andy Halford and Stephen Pusey were measured solely against Group performance, whilst Michel Combes was measured on both Group and Europe Region performance. Group performance was at or above target for each of the key financial measures particularly with respect to free cash flow.

Later in 2010 the GLTI share options granted in 2007 will vest. The threshold relative TSR performance target for the 2007 GLTI performance shares was met and, as such, shares will vest from this award at 25%. In all cases performance was determined at 31 March 2010 year end. These figures are set out in the table below (only the 2009/10 GSTIP payment is included in the audited section towards the end of the directors’ remuneration report).

  Vittorio Colao Andy Halford Michel Combes Stephen Pusey
Base salary        
Base salary effective from July 2010 £1,065,000 £700,000 £770,000 £550,000
GSTIP (Annual bonus)(1)        
Target (100% of base salary earned over 2010) £975,000 £674,100 £736,667 £490,867
Percentage of target achieved for the 2010 financial year 128.7% 128.7% 111.0% 128.7%
Actual bonus payout in June 2010 £1,254,825 £867,567 £817,700 £631,746
GLTI share options        
Exercise price 162.5p 162.5p 162.5p
GLTI share options awarded in July 2007 3,003,575 2,295,589 947,556
Vesting percentage based on three year earnings per share (‘EPS’) growth 100% 100% 100%
GLTI share options vesting in 2010 3,003,575 2,295,589 947,556
GLTI performance shares        
GLTI performance share awarded in July 2007 1,557,409 1,190,305 491,325
Vesting percentage based on relative TSR 25% 25% 25%
GLTI performance shares vesting in 2010 389,352 297,576 122,831
More information on key performance indicators, against which Group performance is measured, can be found in “Key performance indicators”.

Other considerations

Service contracts of executive directors

The Remuneration Committee has determined that after an initial term of up to two years’ duration executive directors’ contracts should thereafter have rolling terms and be terminable on no more than one year’s notice.

All current executive directors’ contracts have an indefinite term (to normal retirement date) and one year notice periods. No payments should normally be payable on termination other than the salary due for the notice period and such entitlements under incentive plans and benefits that are consistent with the terms of such plans.

  Date of
service agreement
Notice period
Vittorio Colao 27 May 2008 12 months
Andy Halford 20 May 2005 12 months
Michel Combes 1 June 2009 12 months
Stephen Pusey 1 June 2009 12 months

Fees retained for external non-executive directorships

Executive directors may hold positions in other companies as non-executive directors. In the 2010 financial year Michel Combes was the only executive director with such a position held at AS System SA. He retained fees of €33,120 in relation to this position over the full financial year. Fees were retained in accordance with Group policy.

Cascade to senior management

The principles of the policy are cascaded, where appropriate, to the other members of the Executive Committee as set out below.

Cascade of policy to Executive Committee – 2010 financial year
Total remuneration and base salary
Methodology consistent with the executive directors.
Annual bonus
The annual bonus is based on the same measures. However in some circumstances these are measured within a region or business area rather than across the whole Group.
Long-term incentive
The long-term incentive is consistent with the executive directors including the opportunity to invest in the GLTI to receive matching awards. In addition, Executive Committee members have a share ownership requirement of two times base salary.

All-employee share plans

The executive directors are also eligible to participate in the all-employee plans.

Summary of plans
Global AllShare Plan
A significant number of employees were granted an award of 340 shares AllShares each on 1 July 2009. These awards vest after two years. In March 2010 the Remuneration Committee stated there would be no further grants.
The Vodafone Group 2008 Sharesave Plan is an HM Revenue & Customs (‘HMRC’) approved scheme open to all permanently employed UK staff. Options under the plan are granted at up to a 20% discount to market value. Executive directors’ participation is included in the option table under "Share options" below.
Share Incentive Plan
The Vodafone Share Incentive Plan is an HMRC approved plan open to all staff permanently employed by a Vodafone Company in the UK. Participants may contribute up to a maximum of £125 per month which the trustee of the plan uses to buy shares on their behalf. An equivalent number of shares are purchased with contributions from the employing company. UK based executive directors are eligible to participate.


All awards are made under plans that incorporate dilution limits as set out in the guidelines for share incentive schemes published by the Association of British Insurers. The current estimated dilution from subsisting awards, including executive and all-employee share awards, is approximately 3.1% of the Company’s share capital at 31 March 2010 (3.3% at 31 March 2009).


A mixture of newly issued shares, treasury shares and shares purchased in the market by the employee benefit trust is used to satisfy share-based awards. This policy is kept under review.

Other matters

The share incentive plan and the co-investment into the GLTI plan include restrictions on the transfer of shares while the shares are subject to the plan. Where, under an employee share plan operated by the Company, participants are the beneficial owners of the shares but not the registered owner, the voting rights are normally exercised by the registered owner at the discretion of the participant.

All of the Company’s share plans contain provisions relating to a change of control. Outstanding awards and options would normally vest and become exercisable on a change of control subject to the satisfaction of any performance conditions at that time.

TSR performance

The following chart shows the performance of the Company relative to the FTSE100 index and FTSE Global Telecoms index. We were a constituent of both throughout the 2010 financial year.

Five year historical TSR performance growth in the value of a hypothetical £100 holding over five years. FTSE 100 and FTSE Global Telecoms comparison based on spot values

Graph provided by Towers Watson and calculated according to a methodology that is compliant with the requirements of The Large and Medium Sized Companies and Groups (Accounts & Reports) Regulation 2008.
Data sources: FTSE and Datastream.
Performance of the Company shown by the graph is not indicative of vesting levels under the Company’s various incentive plans.

Audited information for executive directors

Remuneration for the year ended 31 March 2010

The remuneration of executive directors was as follows:

  Salary/fees   Incentive schemes(1)   Cash in lieu of pension   Benefits/other(2)   Total
Chief Executive                            
Vittorio Colao 975 932   1,255 881   292 280   146 171   2,668 2,264
Other executive directors                            
Andy Halford 674 666   868 650   169 167   26 25   1,737 1,508
Michel Combes 737   818   221   52   1,828
Stephen Pusey 491   632   147   38   1,308
Former Chief Executive                            
Arun Sarin 436   434     553   1,423
Total 2,877 2,034   3,573 1,965   829 447   262 749   7,541 5,195
These figures are the cash payouts from the 2010 financial year Vodafone Group Short-Term Incentive Plan applicable to the year ended 31 March 2010. These awards are in relation to the performance against targets in adjusted operating profit, service revenue, free cash flow, total communications revenue and customer delight index for the financial year ended 31 March 2010.
Includes amounts in respect of cost of living allowance, private healthcare and car allowance.

The aggregate remuneration we paid to our collective senior management(1) for services for the year ended 31 March 2010 is set out below. The aggregate number of senior management at 31 March 2010 was eight, the same as at 31 March 2009.

Salaries and fees 3,655 3,896
Incentive schemes(2) 4,417 2,984
Cash in lieu of pension 164 399
Benefits/other 3,376 2,949
Total 11,612 10,228
Aggregate remuneration for senior management is in respect of those individuals who were members of the Executive Committee during the year ended 31 March 2010, other than executive directors, and reflects compensation paid from either 1 April 2009 or date of appointment to the Executive Committee, to 31 March 2010 or date of leaving, where applicable.
Comprises the incentive scheme information for senior management on an equivalent basis to that disclosed for directors in the table at the top of this page. Details of share incentives awarded to directors and senior management are included in footnotes to “Long-term incentives”.


Vittorio Colao, Michel Combes and Stephen Pusey have elected to take a cash allowance of 30% of base salary in lieu of pension contributions.

Andy Halford was a contributing member of the Vodafone Group Pension Scheme, a UK defined benefit scheme approved by HMRC until 31 March 2010. The scheme provides a benefit of two-thirds of pensionable salary after a minimum of 20 years’ service. The normal retirement age is 60 but directors may retire from age 55 with a pension proportionately reduced to account for their shorter service, but with no actuarial reduction. Andy’s pensionable salary is capped in line with the Vodafone Group pension scheme rules at £110,000. Andy has elected to take a cash allowance of 30% of base salary in lieu of pension contributions on salary above the scheme cap. Liabilities in respect of the pension schemes in which the executive directors participate are funded to the extent described in note 23 to the consolidated financial statements. In January 2010 Vodafone confirmed it would close its UK defined benefit scheme to future accrual by existing members on 31 March 2010. From 1 April 2010 Andy Halford will be paid a cash allowance in lieu of pension of 30% of his full basic salary.

All the individuals referred to above are provided benefits in the event of death in service. They also have an entitlement under a long-term disability plan from which two-thirds of base salary, up to a maximum benefit determined by the insurer, would be provided until normal retirement date.

Pension benefits earned by the directors serving during the year ended 31 March 2010 were:

  Total accrued
benefit at 31
March 2010(1)
Change in
benefit over
the year(1)
value at 31
March 2010(2)
value at 31
March 2009(2)
Change in
transfer value
over year less
Change in
benefit in
excess of
Transfer value
of increase
in accrued
benefit net
of member
to defined
Vittorio Colao
Andy Halford 17.8 (6.5) 628.0 543.6 80.6 (6.2)
Michel Combes
Stephen Pusey
Andy Halford took the opportunity to take early retirement from the pension scheme due to the closure of the scheme on 31 March 2010. In accordance with the scheme rules, his accrued pension at this date was reduced with an early retirement factor for four years to reflect the fact that his pension is being paid before age 55 and is therefore expected to be paid out for a longer period of time. In addition, Andy Halford exchanged part of his early retirement pension at 31 March 2010 for a tax-free cash lump sum of £118,660. The accrued benefit of £17,800 shown above is Andy Halford’s pension after the application of an early retirement factor and after cash has been taken. There is therefore a negative change in accrued benefit over the year. The accrued pension benefits earned by the directors are those which would be paid annually on retirement, based on service to the end of the year, at the normal retirement age. The increase in accrued pension excludes any increase for inflation.
The transfer values 31 March 2010 have been calculated on the basis and methodology set by the Trustees after taking actuarial advice. No director elected to pay additional voluntary contributions. The transfer values disclosed above do not represent a sum paid or payable to the individual director. Instead they represent a potential liability of the pension scheme.

In respect of senior management, the Group has made aggregate contributions of £851,000 into defined contribution pension schemes and had a total service cost of £360,000 for defined pension liabilities.

Directors’ interests in the shares of the Company

Historic medium-term incentives

This table shows conditional awards of ordinary shares made in prior periods to executive directors under the Deferred Share Bonus (‘DSB’). Shares which vested during the year ended 31 March 2010 are also shown below:

  Total interest
in DSB at
1 April 2009
  Shares forfeited
during the year in respect
of the 2008 and
2009 financial years
  Shares vested
during the year in respect
of the 2008 and 2009
financial years(1)(2)
  Total interest in DSB
at 31 March 2010
of shares
of shares
of shares
of shares
Total value
Vittorio Colao 153,671     153,671  
Andy Halford 275,820     275,820  
Michel Combes      
Stephen Pusey 93,670     93,670  
Total 523,161     523,161  
The shares vesting gave rise to cash payments equal to the equivalent value of dividends over the vesting period. These cash payments equated to £23,481 for Vittorio Colao, £42,145 for Andy Halford and £14,313 for Stephen Pusey.
Shares granted on 15 June 2007 vested on 15 June 2009. The closing mid-market share prices at these dates were 163.2 pence and 112.9 pence respectively. The performance condition for this award was a requirement to achieve 85% of the cumulative planned free cash flow target for the 2008 and 2009 financial years, which was met in full.

No shares were awarded during the year under the deferred share bonus to any of the Company’s directors or senior management.

Long-term incentives
Performance shares

Conditional awards of ordinary shares made to executive directors under the Vodafone Group Plc 1999 Long-Term Stock Incentive Plan (‘LTSIP’) and the Vodafone Global Incentive Plan (‘GIP’) for the relevant financial years are shown below. Long-term incentive shares that vested during the year ended 31 March 2010 are also shown below:

interest in
shares at
1 April 2009
or date of
during the 2010
financial year(1)
the 2010
financial year(2)
vested during
the 2010
financial year
interest in performance
shares at
31 March 2010(3)
  Total value(4)   Market
price at date
  Vesting date
of shares
of shares
of shares
of shares
of shares
  £’000   Pence    
Vittorio Colao                              
2006 1,073,465     (1,073,465)         115.75   Jul 2009
2007 1,557,409         1,557,409   2,367   156.00   Jul 2010
2008 7,127,741         7,127,741   10,834   129.95   Jul 2011
2009   6,382,861       6,382,861   9,702   117.20   Jul 2012
Total 9,758,615   6,382,861   (1,073,465)     15,068,011   22,903        
Andy Halford                              
2006 946,558     (946,558)         115.75   Jul 2009
2007 1,190,305         1,190,305   1,809   156.00   Jul 2010
2008 4,357,399         4,357,399   6,623   129.95   Jul 2011
2009   4,201,690       4,201,690   6,387   117.20   Jul 2012
Total 6,494,262   4,201,690   (946,558)     9,749,394   14,819        
Michel Combes                              
2006               Jul 2009
2007               Jul 2010
2008 3,326,701         3,326,701   5,057   129.95   Jul 2011
2009   3,305,625       3,305,625   5,025   117.20   Jul 2012
Total 3,326,701   3,305,625       6,632,326   10,082        
Stephen Pusey                              
2006 319,680     (319,680)         115.75   Jul 2009
2007 491,325         491,325   747   156.00   Jul 2010
2008 1,442,976         1,442,976   2,193   129.95   Jul 2011
2009   2,383,697       2,383,697   3,623   117.20   Jul 2012
Total 2,253,981   2,383,697   (319,680)     4,317,998   6,563        
The awards were granted during the year under the Vodafone Global Incentive Plan using an average of the closing share prices on each of the five working days prior to and including 29 June being 117.5 pence. These awards have a performance period running from 1 April 2009 to 31 March 2012. The performance conditions are a matrix of free cash flow performance and relative total shareholder return. The vesting date will be in June 2012.
Shares granted on 25 July 2006 were forfeited on 25 July 2009. The performance condition on these awards was a relative total shareholder return measure against the companies making up the FTSE Global Telecoms index at the start of the performance period. This condition was not met.
The total interest at 31 March 2010 includes awards over three different performance periods ending on 31 March 2010, 31 March 2011 and 31 March 2012. The performance condition for the award vesting in July 2010 is relative shareholder return measured against companies from the FTSE Global Telecoms index taken at the start of the performance period.
The total value is calculated using the closing mid-market share price at 31 March 2010 of 152.0 pence.

The aggregate number of shares conditionally awarded during the year to the Company’s senior management is 14,142,323 shares. The performance and vesting conditions on the shares awarded in the year are based on a matrix of free cash flow performance and relative total shareholder return.

Share options

No options have been granted to directors during the 2010 financial year. The following information summarises the directors’ options under the Vodafone Group 1998 Sharesave Scheme, the Vodafone Group 2008 Sharesave Plan, the Vodafone Group 1998 Company Share Option Scheme (‘CSOS’), the LTSIP and the GIP HMRC approved awards may be made under all of the schemes above. The table also summarises the directors’ options under the Vodafone Group 1998 Executive Share Option Scheme (‘ESOS’) which is not HMRC approved. No other directors have options under any of these schemes.

In the past, options under the Vodafone Group 1998 Sharesave Scheme were granted at a discount of 20% to the market value of the shares and options under the Vodafone Group 2008 Sharesave Plan may be granted at a discount of 20% to the market value of the shares at the time of the grant. No other options may be granted at a discount.

1 April 2009
or date of
during the
2010 financial
during the
2010 financial
during the
2010 financial
held at
31 March 2010
Date from
price on
Vittorio Colao                    
GIP Nov 2006 3,472,975 3,472,975 135.50 Nov 2009 Nov 2016
GIP Jul 2007 3,003,575 3,003,575 167.80 Jul 2010 Jul 2017
SAYE Jul 2009 16,568 16,568 93.85 Sep 2014 Feb 2015
Total   6,476,550 16,568 6,493,118        
Andy Halford                    
CSOS Jul 1999 11,500 (11,500) 255.00 Jul 2002 Jul 2009
ESOS Jul 1999 114,000 (114,000) 255.00 Jul 2002 Jul 2009
CSOS Jul 2000 200 200 282.30 Jul 2003 Jul 2010
ESOS Jul 2000 66,700 66,700 282.30 Jul 2003 Jul 2010
LTSIP Jul 2001 152,400 152,400 151.56 Jul 2004 Jul 2011
LTSIP Jul 2002 94,444 (94,444) 90.00 Jul 2005 Jul 2012 146.70
LTSIP Jul 2003 233,333 (233,333) 119.25 Jul 2006 Jul 2013 146.70
LTSIP Jul 2004 226,808 (226,808) 119.00 Jul 2007 Jul 2014 146.70
LTSIP Jul 2005 1,291,326 1,291,326 145.25 Jul 2008 Jul 2015
GIP Jul 2006 3,062,396 (3,062,396) 115.25 Jul 2009 Jul 2016 146.70
SAYE Jul 2006 10,202 (10,202) 91.64 Sep 2009 Feb 2010 131.95
GIP Jul 2007 2,295,589 2,295,589 167.80 Jul 2010 Jul 2017
SAYE Jul 2009 9,669 9,669 93.85 Sep 2012 Feb 2013
Total   7,558,898 9,669 (3,627,183) (125,500) 3,815,884        
Stephen Pusey                    
GIP Nov 2006 1,034,259   1,034,259 135.50 Nov 2009 Nov 2016
GIP Jul 2007 947,556   947,556 167.80 Jul 2010 Jul 2017
SAYE Jul 2009 9,669 9,669 93.85 Sep 2012 Feb 2013
Total   1,981,815 9,669 1,991,484        
Michel Combes                    
SAYE Jul 2009 9,669 9,699 93.85 Sep 2012 Feb 2013
Total   9,669 9,699        
The unvested award granted in July 2007 has a performance period ending on 31 March 2010. The performance condition for this award is three year EPS growth ranges of 5% to 8% per annum.
The closing mid-market share price on 31 March 2010 was 152.0 pence. The highest mid-market share price during the year was 153.8 pence and the lowest price was 111.2 pence.



Non-executive directors' remuneration

The remuneration of non-executive directors is reviewed annually by the Board, excluding the non-executive directors. Our policy is to pay competitively for the role including consideration of the time commitment required. In this regard, the fees are benchmarked against a comparator group of the current FTSE 15 companies. Following the 2010 review there will be an increase to the fees from 1 April 2010:

  Fees payable (£’000s)

1 April 2010
1 April 2009
Chairman(1) 600 575
Deputy Chairman 160 155
Non-executive director 115 110
Chairmanship of Audit Committee 25 25
Chairmanship of Remuneration Committee 20 20
From 1 April 2010 the Chairman’s fee also includes the fee for the Chairmanship of the Nominations and Governance Committee.

In addition, an allowance of £6,000 is payable each time a non-Europe based non-executive director is required to travel to attend Board and committee meetings to reflect the additional time commitment involved.

Details of each non-executive director’s remuneration for the 2010 financial year are included in the table below.

Non-executive directors do not participate in any incentive or benefit plans. The Company does not provide any contribution to their pension arrangements.

The Chairman is entitled to use of a car and a driver whenever and wherever he is providing his services to or representing the Company.

Chairman and non-executive directors service contracts

The Chairman, Sir John Bond, has a contract that may be terminated by either party on one year’s notice. The date of his letter of appointment is 5 December 2005.

Non-executive directors, including the Deputy Chairman, are engaged on letters of appointment that set out their duties and responsibilities. The appointment of non-executive directors may be terminated without compensation. Non-executive directors are generally not expected to serve for a period exceeding nine years.

The terms and conditions of appointment of non-executive directors are available for inspection by any person at the Company’s registered office during normal business hours and at the AGM (for 15 minutes prior to the meeting and during the meeting).

  Date of
letter of appointment
Date of
John Buchanan 28 April 2003 AGM 2010
Alan Jebson 7 November 2006 AGM 2010
Samuel Jonah 9 March 2009 AGM 2010
Nick Land 7 November 2006 AGM 2010
Anne Lauvergeon 20 September 2005 AGM 2010
Simon Murray 16 May 2007 n/a
Luc Vandevelde 24 June 2003 AGM 2010
Anthony Watson 6 February 2006 AGM 2010
Philip Yea 14 July 2005 AGM 2010

Audited information for non-executive directors

serving during the year ended 31 March 2010(1):
  Salary/fees   Benefits   Total
Sir John Bond 575 575   3 27   578 602
Deputy Chairman                
John Buchanan 155 155     155 155
Non-executive directors                
Dr Michael Boskin 63     63
Alan Jebson 146 146     146 146
Samuel Jonah 140     140
Nick Land 135 127     135 127
Anne Lauvergeon 110 110     110 110
Simon Murray 110 110     110 110
Professor Jürgen Schrempp 37     37
Luc Vandevelde 130 130     130 130
Anthony Watson 110 110     110 110
Philip Yea 110 110     110 110
Total 1,721 1,673   3 27   1,724 1,700
Former Chairman, Lord MacLaurin, received consulting fees of £42,000 during the year, together with continued benefits valued at £4,700 from his previous arrangements. These arrangements ended in July 2009.

Beneficial interests

The beneficial interests of directors’ and their connected persons in the ordinary shares of the Company, which includes interests in the Vodafone Share Incentive Plan, but which excludes interests in the Vodafone Group share option schemes, and the Vodafone Group short-term or long-term incentives, are shown below:

  17 May 2010 31 March 2010 1 April 2009 or
date of appointment
Sir John Bond 357,584 357,584 237,345
John Buchanan 211,055 211,055 211,055
Vittorio Colao 1,575,567 1,575,567 1,046,149
Andy Halford 2,186,709 2,186,541 1,211,095
Michel Combes 392,389 392,223 232,827
Stephen Pusey 402,599 402,599 254,293
Alan Jebson 82,340 82,340 75,000
Samuel Jonah
Nick Land 35,000 35,000 35,000
Anne Lauvergeon 28,936 28,936 28,936
Simon Murray 246,250 246,250 157,500
Luc Vandevelde 72,829 72,829 72,500
Anthony Watson 115,000 115,000 115,000
Philip Yea 61,250 61,250 61,250

At 31 March 2010 and during the period from 1 April 2010 to 17 May 2010, no director had any interest in the shares of any subsidiary company. Other than those individuals included in the table above who were Board members at 31 March 2010, members of the Group’s Executive Committee at 31 March 2010 had an aggregate beneficial interest in 3,229,762 ordinary shares of the Company. At 17 May 2010 the directors had an aggregate beneficial interest in 5,767,508 ordinary shares of the Company and the Executive Committee members had an aggregate beneficial interest in 3,230,262 ordinary shares of the Company. However none of the directors or the Executive Committee members had an individual beneficial interest amounting to greater than 1% of the Company’s ordinary shares.

Interests in share options of the Company

At 17 May 2010 there had been no change to the directors’ interests in share options from 31 March 2010 (see "Share options").

Other than those individuals included in the table above, at 17 May 2010, members of the Group’s Executive Committee at that date held options for 4,302,914 ordinary shares at prices ranging from 91.6 pence to 167.8 pence per ordinary share, with a weighted average exercise price of 158.0 pence per ordinary share exercisable at dates ranging from July 2008 to July 2017.

Sir John Bond, John Buchanan, Alan Jebson, Samuel Jonah, Nick Land, Anne Lauvergeon, Simon Murray, Luc Vandevelde, Anthony Watson and Philip Yea held no options at 17 May 2010.

Directors’ interests in contracts

None of the current directors had a material interest in any contract of significance to which the Company or any of its subsidiaries was a party during the financial year.

Luc Vandevelde

On behalf of the Board


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