Executive Remuneration Analysis of Vodafone
Executive Remuneration Analysis of Vodafone
1. Introduction
Executive remuneration is the compensation which company rewards for the executive directors. Since the early 1980s, executive payment increase rapidly. The unjustified increasing of executive remuneration pushes the reform of remuneration policy. The Cadbury code mentioned this problem in the Code of Practice in 1995. Cadbury gives some suggestions to companies about the executive remuneration policy. According to his suggestions, companies should dividend total payment into the basic salary and performance-based bonus, and the remuneration report should publish in the annual reporting every year [1]. In additional, UK government provides the vote right for shareholders to supervise the company’s executive remuneration, it also can force executive directors taking investors’ interest into account when they design the company strategy [2].
The analysis of big companies’ remuneration policy is more emphasize by investors and government, especially after the 2008 financial crisis. Investors are paying more attention to whether the executives deserve the high reward. Therefore, the analysis of executive remuneration is more necessary and valuable. Companies in FTSE 100 have the highest market capitalization in UK, and it means the analysis of FTSE 100 companies is most valuable. Vodafone Group, as one of the biggest company in the FTSE 100 companies, has business in almost 70 countries. And the market capitalization is nearly £90bn [3]. Last year, Vittorio Calao, the CEO of Vodafone received around £30m for remuneration in fiscal year 2012, which is one of the highest remuneration in the FTSE 100 [4]. Although the executive rewards are higher than others in the FTSE 100, there still are 96.12% shareholders voting in favour with the Vodafone’s remuneration policy [5]. This raises the question that why there are a huge amount of shareholders convincingly supports their highest remuneration. This essay
1. Introduction
Executive remuneration is the compensation which company rewards for the executive directors. Since the early 1980s, executive payment increase rapidly. The unjustified increasing of executive remuneration pushes the reform of remuneration policy. The Cadbury code mentioned this problem in the Code of Practice in 1995. Cadbury gives some suggestions to companies about the executive remuneration policy. According to his suggestions, companies should dividend total payment into the basic salary and performance-based bonus, and the remuneration report should publish in the annual reporting every year [1]. In additional, UK government provides the vote right for shareholders to supervise the company’s executive remuneration, it also can force executive directors taking investors’ interest into account when they design the company strategy [2].
The analysis of big companies’ remuneration policy is more emphasize by investors and government, especially after the 2008 financial crisis. Investors are paying more attention to whether the executives deserve the high reward. Therefore, the analysis of executive remuneration is more necessary and valuable. Companies in FTSE 100 have the highest market capitalization in UK, and it means the analysis of FTSE 100 companies is most valuable. Vodafone Group, as one of the biggest company in the FTSE 100 companies, has business in almost 70 countries. And the market capitalization is nearly £90bn [3]. Last year, Vittorio Calao, the CEO of Vodafone received around £30m for remuneration in fiscal year 2012, which is one of the highest remuneration in the FTSE 100 [4]. Although the executive rewards are higher than others in the FTSE 100, there still are 96.12% shareholders voting in favour with the Vodafone’s remuneration policy [5]. This raises the question that why there are a huge amount of shareholders convincingly supports their highest remuneration. This essay