Gent's Golden Shower

Vodafone Group PLC (NYSE: VOD) sent out a clear message today – if a company is experiencing a financial nightmare and shareholders are up in arms, the guy in charge should be showered with a load of cash and share options.

However, it is important to explain in turgid detail why rich people are rewarded for what looks like a stinking failure, and why, in fact, the chief executive is actually underpaid compared with his peers: See Vodafone's Bonus Goes to Gents.

In Vodafone's case, the headline figures are: largest ever annual loss by a U.K. company of £13.5 billion (US$20 billion); and a share price that has plummeted by nearly half in the past year (see Vodafone Turns Deep Red, Focuses on Cost Control). As the main person carrying the can for this performance, CEO Sir Christopher Gent received nearly £2.4 million ($3.6 million), comprising £1.19 million salary and £1.2 million in bonus and incentives. Oh, and an extra 1.76 million shares, worth (as this was written) about a further £1.6 million ($2.4 million).

These bonuses still need to be approved by a shareholders' meeting on July 31, but it would appear that the company has already gained approval from its major shareholders and financial watchdogs, and the sums should be ratified. What is less certain is whether Vodafone's staff will be asked to contribute to a whip-round to top up Gent's clearly pathetic bonus.

As if to make the Vodafone decision look even more outrageous, Deutsche Telekom AG (NYSE: DT) this week canceled its annual stock bonus for its board execs, in an acknowledgement of current unsatisfactory financial performance.

A rumor that, on hearing Vodafone's decision, the French national football squad claimed a bonus for being knocked out of the World Cup in the first round without scoring a goal is believed to be the work of some bitter and twisted journalists.

— Ray Le Maistre, European Editor, Unstrung
http://www.unstrung.com