Vodafone bosses to collect pounds 56m windfall
(Guardian (UK) Via Acquire Media NewsEdge) Vodafone's senior team will collect a pounds 56m windfall when the mobile operator completes the sale of its Verizon Wireless subsidiary next year.
In the third-largest transaction in corporate history, Vodafone is selling its stake in America's biggest mobile network to its joint venture partner, Verizon Communications, for $130bn (pounds 80.4bn), and has promised to return 71% of the money to shareholders.
The return is worth 112p per share and will be paid in a mixture of cash and Verizon Communications shares, delivering significant gains for Vodafone's top managers. The company has disclosed that its full senior team, about 250 people, has accumulated a total of 50m Vodafone shares. The deal will see them collect pounds 16m in cash plus pounds 40m worth of Verizon shares. Chief executive Vittorio Colao will receive more than pounds 10m, a sum nearly equivalent to his pounds 11m remuneration last year.
Each Vodafone investor will see the number of shares they hold roughly halved as part of the deal, to reflect the fact that the valuable US business has been sold. The formula allows shareholders, including Vodafone executives, to lock in recent gains in the company's stock market value by receiving cash and Verizon shares which can be sold quickly. Vodafone's stock has soared to a 12-year high since the deal was announced.
Unlike outside investors, Vodafone executives have not paid cash for their shares, but were given them under incentive plans. Colao has not sold a single share in Vodafone since being appointed chief executive, other than to cover his tax bills.
The torrent of money that will flow into the British economy from the deal has been compared to the Bank of England's quantitative easing injections.
The record for such deals is still held by Vodafone's $200bn acquisition of Germany's Mannesmann, while AOL's merger with Time Warner is considered the world's second largest transaction.
Vodafone is one of the most widely held stocks in Britain. Its ability to pay the highest dividend of any blue chip company listed in London has made it a mainstay choice for pension funds. Many executives are expected to re-invest their gains back into Vodafone.
Vodafone is one of the most popular stocks in the UK, because of its generous dividends Photograph: Dan Kitwood/Getty
(c) 2013 Guardian Newspapers Limited.
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