Mayo comes under fire at Vodafone's annual meeting
Wednesday, 25 July 2007
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Vodafone shareholders yesterday attacked John Mayo, the controversial former finance director of Marconi, for wasting the company's time by calling on the mobile phone operator to ratchet up its debt position and spin off its US division.
Efficient Capital Structures, the small rebel investor group backed by Mr Mayo, had hoped to get "double-digit" support for its proposals at Vodafone's annual meeting that would put pressure on the company to take more radical action in the US. Yet shareholders in the mobile phone company resoundingly supported the company's current strategy.
Fewer than 5 per cent of Vodafone's shareholders voted to support demands to spin off the company's 45 per cent stake in Verizon Wireless, the fast-growing US mobile operator, while only 3.2 per cent backed calls to ramp up the company's debt massively by issuing a £34bn bond.
Sir John Bond, Vodafone's chairman, had called on shareholders to reject the resolutions tabled by ECS, but said Vodafone's management "has always recognised the importance of the concerns raised by ECS" and that the rebel group had a "perfect right to raise the resolutions". He added that Vodafone would continue to assess the merits of exercising a put option to sell part of its stake in Verizon Wireless back to the majority shareholder Verizon before the option expires on 9 August.
Vodafone has come under pressure to sell out of the US over the past few years as it does not have majority control of the business. But Arun Sarin, Vodafone's chief executive, noted the progress made in the US over the past year and that the asset's value has increased by roughly 40 per cent to around £54bn as a result. "We see a great future for this business," he said.
At last year's annual meeting, Mr Sarin came under significant pressure from investors unhappy with the company's strategic progress and its under-performing share price, with almost 15 per cent refusing to back the chief executive's reappointment. Yet a year on, Mr Sarin was on much stronger ground and investor wrath focused on Mr Mayo.
One shareholder claimed that during his time at the helm of Marconi, the former GEC industrial giant, Mr Mayo had "turned a cash-rich company into a basket case". "Employees, shareholders, everyone suffered. If what he had done had happened in America, he would have been prosecuted. If it had happened in South America, he would have been lynched," the shareholder said.
Patrick Evershed, a small shareholder in Vodafone, told its board: "All of us think he [Mr Mayo] is wasting your time. He is distracting your attention and is undermining the company. I deplore what he is doing." Another shareholder said Mr Mayo "makes double-glazing salesmen look saintly".
Mr Mayo did not go to the meeting, but Glen Cooper, chairman of ECS, said the shareholder group had achieved its objective of putting the spin-off of the US division firmly on the agenda. Despite the lack of support among investors, Mr Cooper said he expected Vodafone to take action over its US business or face an "investor revolt" at next year's meeting.
