100 Vodafone Group Plc Annual Report 2026
Strategic report
Governance
Financials
Other information
Letter from the Remuneration Committee Chair
On behalf of the Board, I present our 2026 Directors’ Remuneration Report. This report includes our new Directors’ Remuneration Policy (Policy), which will be submitted for shareholder approval at the 2026 AGM, and our 2026 Annual Report on Remuneration which includes details of Remuneration arrangements in respect of the year to 31 March 2026 and a summary of how we intend to apply the Policy during the year to 31 March 2027. Business performance context This year we set out to deliver accelerated growth across Europe and Africa following the last three years of successfully streamlining our portfolio, resetting our capital structure, and refocussing efforts on improving the customer experience. Our FY26 financial results show that we are delivering against our objectives, demonstrated by delivering at the upper-end of our FY26 guidance. Key milestones in Europe included the UK merger with Three UK, where we are rapidly delivering on our commitment to building a best-in-class mobile network and applying our multi-brand strategy and utilising cross-selling opportunities between Vodafone and Three customers. Elsewhere in Romania, we have built scale through the acquisition of Telekom Romania assets, positioning us well for accelerated growth. In Africa we announced that Vodacom Group has agreed to acquire a controlling stake in Safaricom, creating greater scope for growth in the region. Completion of the acquisition is subject to certain conditions and is currently prevented by a court order. These results are reflected in our outcomes for the 2026 Global Short-Term Incentive (‘GSTIP’), and 2024 Global Long-Term Incentive (‘GLTI’) awards, with both awards achieving above target outcomes.
Review of Directors’ Remuneration Policy Our current Policy was approved in 2023 and has operated since then without amendment. In line with our triennial review cycle, we are proposing updates to the policy. The new Policy is enclosed on pages 103 to 108. Vodafone has undergone significant change since Margherita Della Valle was appointed as Group Chief Executive in 2023. Our strategy, focused on Customers, Simplicity and Growth, has transformed the shape of the Group. In particular, right-sizing Europe for growth whilst simplifying our structure. This change has included the disposal of our Spanish and Italian businesses and the completion of the merger with Three in the UK. These changes gives us a firm foundation for growth as our year end results demonstrate. Against this backdrop, the Remuneration Committee reviewed the Policy to ensure it continues to support our growth trajectory. Objective of review In reviewing the Policy, the Committee’s key objectives were to ensure that it reflects the evolving shape of the business, supports the next phase of growth, and enables the attraction of the talent required to deliver the Group’s strategy, drive innovation and unlock new revenue streams. Overall, the Committee concluded that elements of the existing approach should be enhanced to better support these objectives. In particular, the Committee was unanimous in its decision to strengthen the incentive for management to drive share price growth through the introduction of Market Value Share Options (‘MVSO’), which also supports the need to compete for talent in adjacent sectors such as technology. The Committee felt strongly that the importance of free cash flow and concerns around the relative TSR peer group should be reflected. The proposed changes, which focus on plan structure rather than quantum, are summarised in the table on the next page, together with the rationale for each change.
In regards to the annual bonus, we delivered good outturns across our Customers and Growth measures. Our achievement levels for adjusted free cash flow, service revenue, and NPS were particularly strong, and we reported above target performance for EBIT, churn, and revenue market share. The results of our 2024 GLTI award also demonstrated effective cash flow management reflected by maximum vesting for the FCF measure. For our ESG measure we made progress against our net zero and female representation in management ambitions, and achieved our overall ambition for financial inclusion of servicing over 75m financial inclusion customers by 2026. Remuneration outcomes during 2026 GSTIP performance (1 April 2025 – 31 March 2026) Annual bonus performance during the year was determined against both financial and strategic measures aligned to our strategic priorities of Customers and Growth. The four measures underpinning Growth, equivalent to 70% of the award, include service revenue (20%), adjusted EBIT (20%), adjusted FCF (20%), and revenue market share (‘RMS’) (10%). The measures under the Customers element, equivalent to 30% of the award, include NPS (20%) and churn (10%). Overall performance under the GSTIP was above the mid-point of the target range. The combined performance resulted in an overall bonus payout of 64.5% of maximum. Read more on pages 110 and 111 GLTI performance (1 April 2023 – 31 March 2026) The 2024 GLTI award (granted July 2023) was subject to adjusted FCF (60% of total award), relative TSR (30% of total award), and ESG (10% of total award) performance. All performance
conditions were measured over the three-year period ending 31 March 2026. Adjusted FCF performance finished at the top of the range, resulting in 100.0% of this element vesting. Relative TSR outperformance was below the median of the peer group resulting in no vesting under this measure. ESG performance was assessed against three metrics and vested at 100.0%. This resulted in an overall vesting percentage for the 2024 GLTI of 70.0% of maximum. Read more on pages 111 and 112 Fair pay A key pillar of our executive remuneration arrangements is ensuring that they reflect the experiences of our wider workforce. Our six fair pay principles which we globally measure ourselves against each year form an important foundation for this. This work has ensured we are well placed for the incoming EU Pay Transparency Directive, which will impact colleagues based in EU member states. Through harnessing the scale of the Group, we have designed approaches that comply with local requirements and help embed a culture of openness about pay. Consideration of discretion The Committee reviewed the appropriateness of the outcomes of both the annual bonus and long-term incentive plan in light of both the relevant performance targets and wider internal and external considerations, including the wider stakeholder experience, across the respective measurement periods. The Committee also acknowledged that no windfall gains had occurred under the long-term incentive plan. It was agreed that the outcomes were appropriate and that no adjustments were required.
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