The Vodafone board of directors needs a vigorous overhaul, claims a leading investor group, worried that the company is suffering from strategic weaknesses and a disastrous acquisitions record.
The Ontario Teachers' Pension Plan (OTPP), which has a 0.42 per cent stake in Vodafone, has also stated that it will oppose the re-election of Sir John Bond as the company's chairman and the re-election of John Buchanan as Vodafone's deputy chairman at the AGM. It will, however, continue to support Vittorio Colao, Vodafone's CEO.
Of more importance, industry observers believe that OTPP's dissatisfaction could increase pressure on Vodafone to sell some of its minority investments in China Mobile, SFR and its 45 per cent stake in Verizon Wireless.
The OTPP has heavily criticised Sir John Bond, who has been chairman since 2006, for failing to resolve significant structural and strategic weaknesses, resulting in Vodafone trading at a substantial, persistent discount to its asset value.
"Ontario Teachers' believes that board rejuvenation is a critical step to catalyse a corporate restructuring and a re-examination of Vodafone's long history of poor capital allocation and disastrous M&A," said the group.
Commenting on this action, Morgan Stanley analyst, Nick Delfas, said that it might trigger Vodafone to review its minority stake in other operators. "Vodafone's CEO has said he does not see himself as a manager of minority positions long term, but so far there has been no public move to reduce or sell these," Delfas added.
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