Mergers & acquisitions

Pressure Mounts on Vodafone CEO

If Vodafone Group plc (NYSE: VOD) CEO Arun Sarin is a fan of the U.K. football (soccer) scene, he'll be watching his back today.

Why? Because this morning he received what is perceived by British football coaches to be the kiss of death -- a vote of confidence from his chairman.

The public message of support from Vodafone chairman Lord MacLaurin of Knebworth (honestly) follows months of mounting pressure on the CEO from investors and analysts over the company's long-term strategy, especially regarding Vodafone's extensive international holdings and speculation about internal wrangling. (See Vodafone Mulls Japanese Sale, Vodafone Rings Warning Bell, and Vodafone Sticks With Verizon.)

In his short statement, Lord MacLaurin said: "I want to make it clear that I and the Board are totally supportive of our Chief Executive, Arun Sarin, as he takes the Company forward in changing and challenging times. Any other suggestion is completely untrue."

In the murky world of soccer management that would translate as "start clearing your desk, sonny."

Sarin, though, isn't packing his kit bag. In fact, he appears to be on the offensive. Last week he saw off chief marketing officer Peter Bamford, regarded as one of the obstructive Old Guard. (See Vodafone's Bamford To Leave.)

And now another perceived opponent, Sir Christopher Gent, Sarin's predecessor as CEO, has quit his role as honorary lifetime president, a non-executive position. Coincidentally, Lord MacLaurin felt it necessary to publicly protect Sir Christopher back in 2002 when he was under fire in the media. (See Sticks & Stones May Break My Bones….)

According to media speculation, Gent has been unhappy at Sarin's handling of Vodafone's international strategy and the potential dismantling of the empire he built up, and has been campaigning against the current CEO and his supporters. But Sir Christopher, in his resignation statement, refutes the allegations outright, dismissing suggestions he has been fueling internal unrest.

"It has been alleged that I have used the position [as Life President] to interfere with the company and obstruct current management. These allegations are without foundation… If there is a 'whispering campaign' or 'conspiracy,' which I very much doubt, then I am not party to it."

He adds: "When I was an executive at Vodafone, relationships within the company and at Board level were characterized by openness and trust. We were mercifully free of company politics and blame culture. I do not wish to be subject to a disinformation campaign intended to manipulate the press. Furthermore I do not want any misunderstanding of the role of Life President to be used in a way that might detract from Vodafone’s future prospects."

He ends, though, with a small kick to the nether regions of the current management. "Nothing would give me greater pleasure than to see Vodafone recover from its present difficulties."

News of Gent's decision, viewed as one step towards greater management unification, helped Vodafone's share price rise by 4.75 pence, nearly 4 percent, to 129.5 pence on the London Stock Exchange , valuing the operator at £78.2 billion (US$135 billion).

Robin Hearn, an analyst at Ovum Ltd. , reckons Sarin inherited an almost impossible task from Gent. "The job of bringing all those disparate elements of the Vodafone empire together in an increasingly competitive and challenging climate has been much more difficult than any of the Vodafone management, now or then, would have ever thought," writes Hearn in a research note.

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