105 Vodafone Group Plc Annual Report 2026
Strategic report
Governance
Financials
Other information
Remuneration Policy continued
Long-Term Incentive ¹ – Global Long-Term Incentive Plan (‘GLTI’) Objectives
Long-Term Incentive ¹ – Market Value Share Options (‘MVSO’) Objectives
– Attract and retain critical talent. – Incentivise delivery of our strategy. – Operate simple pay structures.
– Attract and retain critical talent. – Incentivise delivery of our strategy. – Operate simple pay structures. – Generate returns for shareholders.
Operation – Award levels and the framework for determining vesting are reviewed annually. – Long-term incentive awards consist of awards of shares subject to performance conditions which are granted in respect of any financial year. – Awards will vest based on Group performance against the performance metrics set out below, measured over a period of normally not less than three years. 2 3 4 – Dividend equivalents are paid in cash and/or shares by reference to the vesting period (and holding period, if applicable) in respect of shares that vest. Opportunity – Maximum long-term incentive face value at award of 350% of base salary for the
Operation
– The award 7 consists of market value share options granted to participants in respect of any financial year. The exercise price of the options is set using the prevailing share price around the time of the grant. – The number of options granted is determined each year prior to grant and by reference to the Black-Scholes option pricing model with assumptions aligned to the expected life of the options. – The Black-Scholes model considers factors such as the underlying share price, the lifespan of the award, the expected volatility of the shares, the risk-free interest rate, and the anticipated dividend yield. These inputs are shared with the Committee prior to grant to ensure each assumption is reasonable. The exercise price and number of options are also reviewed by the Committee prior to the grant.
Chief Executive and 315% for other Executive Directors in respect of any financial year. – Threshold long-term incentive face value at award is 20% of maximum opportunity. Minimum vesting is 0% of maximum opportunity. Awards vest on a straight-line basis between threshold and maximum. – The performance measures normally comprise a mix of financial and strategic measures. Financial measures may include (but are not limited to) profit, revenue and cash flow with a weighting of no less than 50%. Strategic measures may include (but are not limited to) customer KPIs and ESG. Targets are set on an annual basis usually prior to the award being granted. – The use of free cash flow 5 as the principal performance measure ensures we apply prudent cash management and rigorous capital discipline to our investment decisions. – The use of ESG 6 metrics reflects the importance of our performance and progress against our long-term mission in this area. – The Remuneration Committee reserves the right during the lifetime of the Remuneration Policy to change the performance conditions applicable to GLTI awards to other financial, shareholder return and strategic metrics, if the Remuneration Committee determines that to do so would be in the best interests of the Company. The Remuneration Committee would engage with major shareholders prior to changing the performance conditions applicable to GLTI awards in this way.
– Awards will vest based on continuing employment with the Group, measured over a period of normally not less than three years with a further two-year holding period. 2 3 4 – Once options have vested, they may normally be exercised until the tenth anniversary of the date they were granted. Opportunity – Share options are granted with a fair value equivalent to 150% of base salary for the Chief
Performance metrics
Executive and 135% of base salary for other Executive Directors. The number of options granted is determined annually informed by the Black‑Scholes option pricing model. The ultimate value realised will depend on share price growth above the exercise price. – Whilst this award has no explicit performance metrics, the nature of options, whereby value can only be derived if the share price appreciates, means that the requirement for growth in the share price beyond the exercise price effectively acts as a performance condition. 3
Performance metrics
Long-term incentive notes: 1. When referring to our long-term incentive awards we use the financial year end in which the award was made. For example, the ‘2027 award’ will be made in the financial year ending 31 March 2027. The awards are usually made in the first half of the financial year. 2. In exceptional circumstances, such as but not limited to where a delay to the grant date is required, the Remuneration Committee may set a vesting period of less than three years, although GLTI awards will continue to be subject to a performance period of at least three years. Awards may be subject to a mandatory two-year post-vesting holding period before the underlying shares can be sold. 3. The Remuneration Committee retains the discretion to adjust the extent to which an award vests based on the achievement of the relevant performance conditions, where applicable, and to reflect the Company’s and Executive Director’s underlying performance and any other factors the Remuneration Committee considers appropriate. In addition, the Remuneration Committee has the discretion to reduce long-term incentive grant levels for Executive Directors who have neither met their SOG nor increased their shareholding by 100% of salary during the year. 4. Vested GLTI shares and exercised MVSOs are normally subject to a mandatory two-year holding period (in the case of options, limited to two years from the date of vesting) before the underlying shares can be sold. If an Executive Director departs the Group, they are required to retain shares for a further two-years. The number of shares which must be retained is the lower of the share ownership requirement for their role and their actual shareholding. The number of shares will be confirmed in their leaver agreement.
5. Based on the cumulative adjusted free cash flow figure over the performance period. The detailed targets and the definition of adjusted free cash flow are determined each year as appropriate. The target adjusted free cash flow level is set by reference to our long-range plan and market expectations. The vesting levels as a percentage of the award subject to this performance element are: 0% vesting for this element for below threshold performance; 20% vesting for threshold performance; and 100% vesting for maximum performance (with linear interpolation between points). 6. Our ESG targets are aligned to our externally communicated mission. Where performance is below the agreed ambition, the Remuneration Committee will use its discretion to assess vesting based on performance against the stated ambition and any other relevant information. 7. Market value share options is a new award introduced in the 2026 Directors’ Remuneration Policy, subject to approval at the 2026 AGM. The structure is designed to strengthen alignment between Executive Directors and shareholders by linking reward outcomes directly to absolute share price growth.
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