Telefonica cuts executive pay as net profit slumps

Spanish telecom giant Telefonica said Wednesday it would slash pay for top managers by 30 percent and cancel its dividend for this year after its net profit slumped in the second quarter. The Madrid-based company posted a net profit for the April-June period of 1.33 billion euros ($1.61 billion), a 13.7 percent decline over the same time last year while revenues rose 0.1 percent to 15.47 billion euros. The company, which unexpectedly released its second quarter results a day ahead of schedule, said it foresees no significant revenue growth this year, compared with a previous forecast of a 1.0 percent boost at least. Telefonica said solid revenue growth in Latin America had help offset lower sales in Europe. "Our strong diversification continues to be a key lever amid challenging trading conditions in some of our markets, with a growing contribution of Telefonica Latinoamerica to consolidated results," Telefonica Chief Executive Cesar Alierta said in a statement. Telefonica board members agreed to take a 20 percent pay cut, while top managers' total compensation will be slashed by 30 percent, the company said. "The board of directors has decided that, under the criteria of prudent administration and extremely challenging conditions, it is in the best interest of all Telefonica's stakeholders that the dividend and share buyback programme corresponding to 2012 be cancelled as a one-time exceptional measure," it said. Telefonica now plans to pay a dividend of 75 cents a share in 2013. Net profit for the first half of the year was down by 34.4 percent at 2.1 billion euros over last year.