Telefónica has cancelled its divided and share buyback repurchase for 2012. The temporary measure aims at strengthening the company's balance sheet so that it can offer a 0.75 euro per share dividend in 2013.
Telefónica, the world's sixth largest mobile network provider, has heeded advice from ratings agencies and plans to focus its efforts on reducing its debt burden in order to avoid a credit rating cut. In addition to boosting its balance sheet by holding back a dividend payment, the company will enact a payroll cut lead by company CEO César Alierta, who will give up 3 million euros of his salary.
The pay cut trims Alierta's salary by 30%. Board members will also see their pay cut by 20%. Other companies on the Ibex ought to follow Telefónica's lead and adapt their compensation strategies to the tenor of the times.
