The Vodafone chief executive, Nick Read, is to step down after failing to reverse a sharp fall in the company’s share price, as the telecoms company braces for steep cost cuts and potential job losses.
Read, a two-decade Vodafone veteran who has run the company since 2018, has been ousted after failing to get to grips with a more than 40% fall in the company’s share price during his four-year tenure.
Last month, the company, which has appointed the chief financial officer, Margherita Della Valle, as interim boss as the hunt for a new permanent chief executive begins, cut its annual profit forecast and announced a €1bn-plus (£879m) cost-cutting plan, including job cuts, to cope with soaring energy bills and inflation.
“I agreed with the board that now is the right moment to hand over to a new leader who can build on Vodafone’s strengths and capture the significant opportunities ahead,” said Read, who will step down at the end of the year but remain as an adviser to the board until March.
Vodafone said Read would receive this year’s salary and benefits to 31 March, about £1.1m. He will then receive an amount in lieu of his pay until the end of his 12-month notice period on 5 December 2023.
He will also be eligible for any bonus payout for this financial year to the end of March, and will receive subsequent payouts when long-term incentive plans vest over the next three years.
Vodafone added it would pay up to £8,400 towards legal fees in connection with his departure, and said he was entitled to “outplacement support” worth up to £60,000.
Della Valle will be paid a salary of £1.1m as the interim chief executive and chief financial officer, which is in line with Read’s pay at present.
Read received a total remuneration package of £4.2m last year, and £3.5m in 2020.
The 58-year-old leaves amid talks to push through a deal to combine Vodafone UK with its rival Three UK to create Britain’s biggest mobile operator and compete more effectively with BT and Virgin Media O2.
However, deals completed to date – including an €18.4bn deal to buy Liberty Global’s pay-TV and broadband business in Germany, Vodafone’s biggest market accounting for 30% revenue, and an agreement to sell up to 50% of its €14.8bn mobile phone masts business – have failed to win over investors and reignite the company’s share price.
“With the shares languishing at their lowest levels in more than 20 years, it is hard to describe departing Vodafone CEO Nick Read’s tenure as anything other than a disappointment,” said Russ Mould, the investment director at AJ Bell.
“Read has faced some exceptional challenges in that time, notably an inflation crisis and a global pandemic; however, he has struggled to persuade the market and, ultimately his employers, that he has a strategic plan to help revive Vodafone’s growth.”
The board has tasked Della Valle, who is understood to be in the running for the chief executive role on a permanent basis, with “accelerating the execution of the company’s strategy to improve operational performance and deliver shareholder value”.
Other potential candidates include Stephen Carter, the chief executive of the London-listed events group Informa, who has also held roles at the telecoms company Alcatel-Lucent, the cable TV business NTL and was the first chief executive of the UK regulator Ofcom. Carter joined the board of Vodafone in July.
Analysts at Berenberg also point to Nick Jeffery, the former chief executive of Vodafone UK, who left the business in 2020 to run Frontier Communications.
Vodafone’s underperforming share price has made it a target for activist investors. In September, the French telecoms billionaire Xavier Niel acquired a 2.5% stake, citing opportunities to accelerate a “streamlining” of its business.
In May, the United Arab Emirates’ biggest telecoms provider, e&, bought a 9.8% stake in Vodafone.
