Vodafone 2015 Annual Report Download - page 78

Application of policy in 2016
At the time of presenting our Policy Report
to shareholders for approval at the 2014
annual general meeting, it was envisaged
that the policy would remain unchanged
for three years. Following a review during
the year, the Committee agreed that the
policy continues to remain both appropriate
and effective, and therefore no changes are
proposed for the coming year.
However in order to ensure our arrangements
are focused on driving our latest strategic
priorities, a number of changes to the GSTIP
that remain within our policy framework have
been made. These changes are outlined
below and follow on from consultation with
a number of our largest shareholders earlier
this year:
a the balance of performance measures
for the 2016 GSTIP will be weighted
60% in respect of the nancial
measures, and 40% in respect of the
strategic measures.
a in light of this increase in weighting,
the Competitive Performance assessment
measure previously used under the
GSTIP will be replaced with Customer
Appreciation KPIs. This will see brand
consideration metrics added to the
strategic element of the GSTIP, with net
promoter score (‘NPS’) also retained as
a measure. Other relevant indicators
of strategic performance will also be
considered in assessing nal outcomes.
Further information on how these
measures will be assessed is provided on
page 90.
The above changes remain in line with our
shareholder approved remuneration policy
which allows up to 50% of GSTIP opportunity
to be based on strategic measures.
The Committee is however aware of wider
market concerns regarding the formulaic
calculation of annual bonus payouts,
and the potential for such arrangements
to deliver value regardless of wider
Company performance.
It is for this purpose that the Committee
retains the discretion to alter nal
outcomes under our annual bonus plan
where the formulaic payout is deemed
to be inappropriate. This includes the
potential to reduce any payout under the
strategic element of the bonus, if such
a formulaic payout is deemed inappropriate
in light of wider nancial performance.
Whilst we will not be seeking approval of our
remuneration policy at the 2015 annual
general meeting, the full policy report has
been included in this report for reference.
Corporate governance
Vodafone continues to set demanding share
ownership goals for our Executive Directors.
The Committee is pleased to see that all
three Executive Directors have voluntarily
exceeded these guidelines by a signicant
margin, including Nick Read who only joined
the Board this year.
During the year, the UK Corporate
Governance Code was updated to include,
on a comply or explain basis, a requirement
to include malus and clawback provisions
in respect of all variable elements of executive
remuneration. The Committee determined
that the current malus provisions, which allow
unvested awards to be lapsed either wholly
or in part, will be retained for 2016. Further,
the Committee has agreed to introduce
an appropriate clawback provision to our
remuneration policy on the next occasion
that the policy report is put forward for
shareholder approval.
Conclusion
This is an exciting time to be a shareholder
of Vodafone, with the maturity of Project
Spring set to lay the foundations for the next
step in our Company’s history. Whilst our
remuneration policy remains an important
tool in driving these goals, the Committee
remains aware of external concerns regarding
executive compensation and will continue
to work within the principles which underpin
our approach to executive remuneration
to ensure our arrangements remain effective
but fair. These principles, which remain
unchanged from last year, are as follows:
a we offer competitive and fair rates of pay
and benets to attract and retain the
best people;
a our policy and practices aim to drive
behaviours that support our Company
strategy and business objectives;
a our “pay for performance” approach
means that our incentive plans only deliver
signicant rewards if and when they are
justied by performance; and
a our approach to share ownership is
designed to help maintain commitment
over the long term, and to ensure that the
interests of our senior management team
are aligned with those of shareholders.
Finally, following the conclusion of the 2015
annual general meeting which is to be held
on 28 July 2015, I will be stepping down both
as Chairman of the Remuneration Committee
and from the Board. I would therefore like
to thank you, our shareholders, for the
continued support and engagement that you
have displayed throughout my tenure, as well
as the other members of the Committee
for ensuring debate has always remained
challenging, thought-provoking and, above
all, focused on the needs of our stakeholders.
I will be succeeded by Valerie Gooding who
I look forward to introducing at our 2015
annual general meeting.
Luc Vandevelde
Chairman of the Remuneration Committee
19 May 2015
Vodafone Group Plc
Annual Report 2015
76
Directors’ remuneration (continued)