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Business review Performance Governance Financials Additional information
13
Vodafone Group Plc
Annual Report 2012
Explore in more detail
More on Governance
Pages 63 to 73
More on Risk management
Page 39
More on Director’s remuneration
Page 74 to 87
More on Mobile for Good
Page 38
How is the Board
currentlyfunctioning?
The Board’s primary focus is to support and
advise the executive management on the
delivery of the Group’s strategy within a clear
and transparent governance framework, and
Ibelieve we are currently fullling that role.
Ourannual survey on Board effectiveness has
prompted some minor modications but no
major overhaul.
With respect to expertise, my predecessor
made excellent progress in assembling a
broad diversity of talents and outlooks.
The Board currently comprises business
leaders from sectors as wide-ranging as
nancial services, retail, venture capital,
accountancy, technology and regulated
industries, as well as far-reaching geographical
knowledge. I would be keen to build our
experience of internet-based business models,
as well as a detailed knowledge of Asian
markets. We also aim to bring further gender
balance over the coming years as we reach
our goal of 25% of Board members being
women by 2015.
How do you approach
shareholderremuneration?
Our shareholder remuneration strategy is
focused on total shareholder return, through
acombination of growing the value of the
Company by investing in opportunities that
earn a return in excess of our cost of capital,
and a consistent dividend policy. Our dividend
per share growth target, put in place two years
ago, sets out to give shareholders a growing
dividend stream comfortably covered by
expected annual freecashow. We are
alsonearing the end ofa £6.8 billion share
buybackprogramme and this year paid
anadditional special dividend of 4.0 pence
pershare out ofthe proceeds of our income
dividend from VerizonWireless.
Taking ordinary dividends, this year’s special
dividend and the buyback programme
together, total cash returns to shareholders
have been equivalent to approximately
30%ofour market capitalisation over the
lastfour years. Furthermore, in the period
from1April 2011 to 21 May 2012, our share
price has outperformed the MSCI European
Telecoms index by 19.6% and the FTSE 100
by3.7%.
And what about management
remuneration?
The executive management team should
be paid well to the extent that they create
value for shareholders. Our incentive
schemes have a bias towards long-term,
share-based plans, which incentivise our
leaders to prioritise multi-year investment
decisions and align their interests closely
with those of institutional shareholders.
We have deepened this alignment this year
by introducing shareholding requirements
throughout the senior leadership team.
How is Vodafone addressing its
broader social responsibilities?
Mobile telecommunications have played
a signicant role in the development of
emerging market economies, not only
throughthe investment in infrastructure
but also through allowing people to connect
with each other cheaply and easily for the
rst time. Vodafone and Vodacom have
clearly played their part in this, particularly
in India and southern Africa.
We are also taking a step further, introducing
mobile nancial services platforms across
many of our markets, and developing mobile
health initiatives. These, of course, stand to
benet our business through enhanced
customer loyalty, but they also bring wider
social benets to the countries in which they
are deployed.
Finally, we can also use the resourcefulness
and dynamism of our employees to help raise
funds to target specic medical issues that
compromise thousands of lives in emerging
markets. This year we launched our Moyo
challenge, to raise £7 million through our
employees for the Vodafone Foundation
partner Comprehensive Community Based
Rehabilitation (‘CCBRT’) to eradicate obstetric
stula (a maternal health condition) in
Tanzania, which has affected 24,000 women
since 2000. We are well on our way to reaching
our target by June this coming year, aided by
the generosity of our employees, suppliers
andpartners.
Gerard Kleisterlee
Chairman
“ Our share price has
outperformed the MSCI
European Telecoms index
by 19.6% and the FTSE 100
by 3.7%”
2009
2010
2011
1.0
2.1
4.0
4.1
4.5
2012 2.03.64.6
Cash returns to shareholders
Ordinary dividends paid
Share buyback
Special dividends paid
£bn
Vodafone share price vs FTSE 100
1 April 2011 to 21 May 2012
200
160
120
7000
5500
4000
Jun 11 Aug 11 Oct 11 Dec 11 Feb 11 Apr 12
Vodafone (share price in pence) FSTE 100 index
For legal reasons it should be noted that past performance cannot be relied on as a guide to future performance.
e