Investors seek to veto Gent's £2m

SHAREHOLDERS in Vodafone say they will refuse to sanction a £2m bonus for chief executive Sir Christopher Gent and want the beleaguered telecoms giant to rewrite its proposed pay deals for top directors for a second time.

The hard line is led by the National Association of Pension Funds, whose members hold one in three shares. David Gould, director of investments at NAPF, said: 'We won't be happy to see the remaining £2m paid. Our members just won't wear it.'

Gent was awarded a one-off payment of £10m when he completed the £113bn acquisition of German telecoms company Mannesmann two years ago. After an outcry from investors, Gent agreed to take half in cash and half in shares.

Under the agreement, he could soon claim those shares, though the slump in Vodafone's stock market value means they are now worth little more than £2m. Their paper value in 2000 was £5m. But shareholders who have seen Vodafone's market value slump from £280bn to £77bn are incensed that Gent will be rewarded for the deal.

Concerns that executives are rewarded for deals that turn out to be worthless has prompted NAPF to rewrite its investment rules to outlaw 'transaction bonuses'.

The investment arm of the Co-operative Insurance Society plans a similar ban. Other companies that have outraged shareholders with transaction bonuses have included ailing telecoms group Telewest, United Business Media and GlaxoSmithKline. The Association of British Insurers, which speaks for firms controlling about 25% of the stock market, says shareholders will no longer support such bonuses until the benefits of a takeover are evaluated.

Concerns about Gent's bonus and Vodafone's recent slump in value are also expected to prompt calls for new talks on a proposed executive pay structure. This will be put to a vote at the company's annual meeting next month. Though Vodafone's remuneration committee has consulted widely on the packages to head off a showdown over pay that has blighted the company's last two annual meetings, senior investors say it should think again.