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In a staggering new departure in executive pay Arun Sarin, the former chief executive of Vodafone, received a cheque for £500,000 to allow him to move back to his home in the United States when he quit.
That helped to take the ex-boss of the world's largest mobile company's total payout in his final year to £8.1 million.
Sarin had said he wanted a sabbatical to “goof about” when he finally left Vodafone in February. A spokesman for Vodafone said: “It was simply part of the contractual agreement we had with Arun. He would have been given that amount whenever or however he left.”
The £500,000 payout for Sarin to return to the US is doubly controversial because he received a £1 million fee largely for relocation costs when he was recruited to Vodafone from American firm Lucent in 1999.
Despite the fact that Sarin stepped down from the board at the end of July 2008 and only stayed on as a consultant for the following seven months, his £8.1 million total reward was higher than the £7.3 million he received as a full-time chief executive in the year to March 2008.
Last year's pay is made up of basic pay of £436,000, a short-term bonus of £434,000, perks including the relocation fee of £553,000, cash instead of dividends on his share plans of £564,000 and long-term bonuses paid in shares worth £6.1 million.
The rewards come at a time when investors are becoming increasingly irritated about directors' pay.
Shell's remuneration report was voted down last month over a new bonus scheme while Next directors received a bloody nose from shareholders over a £351,000 payment they shared.
Sir Martin Sorrell faced investors' ire at today's annual meeting of advertising giant WPP, held in Dublin for the first time after it moved there for tax reasons. A significant number of institutional investors were expected to vote against a new five-year bonus plan under which Sorrell could gain as much as £60 million worth of free shares over that time.
But Vodafone is unlikely to face similar protests. It will point out that Sarin's contract was watertight and also that the new management under chief executive Vittorio Colao has agreed to get no basic pay rise this coming year. Colao saw his pay and short-term bonus cut from £2.96 million to £2.26 million last year even though he took over from Sarin halfway through the year.
Finance director Andy Halford also saw his package cut from £1.85 million to £1.51 million. Indian-born US citizen Sarin told the Evening Standard when he announced his shock departure a year ago that he would return to California after a sabbatical.
“I want to goof off for a while and travel around the world,” he said. “That's not like a chief executive flying hours for a half-day meeting, but hiking up mountains, lingering in art galleries and really getting to know places.
