Vodafone has comfortably defeated moves by a rebel shareholder to force the company to spin off its minority stake in Verizon Wireless, the US mobile operator.

An annual meeting forecast to prove deeply uncomfortable for the board proved straightforward as small shareholders lined up to denounce former Marconi finance director John Mayo, who fronts dissident activist investor Efficient Capital Structures (ECS). Two spoke from the floor to jest that Mayo would have been "lynched" had he attended. No representative from ECS spoke at the meeting.

ECS wanted the company to release up to £38bn by handing its 45% stake in Verizon Wireless back to shareholders and increasing its debts in order to return cash to investors. Vodafone had rejected this as undermining its ability to maximise the value of the Verizon Wireless holding. It also said that increasing its debt by £34bn through a massive bond issue would undermine its ability to invest in its businesses, particularly those in developing countries like South Africa and India.

Vodafone chief executive Arun Sarin already had the backing of several key investors, including M&G Investment Management, Insight and Morley Fund Management. But with a diverse ownership base comprising 2500 institutional shareholders who own 98% of the business, City observers were keenly interested in the scale of the rebellion. US investor group Glass Lewis backed ECS.

ECS used a clause in the Companies Act to get its proposals on to the agenda, but its resolutions were comfortably defeated by proxy voters. More than 93% of shareholders voted against ECS's plans to spin off or issue tracking shares in Verizon Wireless, while nearly 95% voted down the bond issue.

Vodafone chairman Sir John Bond criticised the "extraordinary" level of debt that Vodafone would have to take on under the bond issue, which would increase the firm's interest payments by around £2bn a year and limit the board's flexibility. He also warned that it would jeopardise Vodafone's progressive dividend policy.

Sarin, meanwhile, praised Verizon Wireless's double-digit growth, adding: "We see a great future for the business."

The board was backed by a succession of shareholders speaking from the floor. One said: "(ECS and John Mayo) are wasting the board's time and our money, and people who remember Marconi would lynch Mayo had he shown up."

Mayo was chief executive designate at Marconi before resigning after a shock profits warning six years ago sent shares into a tailspin.

In a statement later, Vodafone said it would keep its strategy on Verizon Wireless and the group's capital structure under review, while noting the "strong votes" against the ECS resolutions. A defiant ECS, meanwhile, warned Vodafone could face an investor backlash if it does not address their concerns within a year.

"This wasn't about the votes but about action by the company," said ECS chairman Glenn Cooper. "We're convinced Vodafone will take action about Verizon. I'd be very surprised if we have the same debate the same time next year. If within that timeframe there is no action, the board will face an investor revolt and an egm."

Vodafone directors also defended proposals to reduce earnings targets under the firm's executive bonus scheme.

Under its long-term incentive scheme this year, the share options target for earnings per share growth has been cut from between 5% and 10% to between 5% and 8%.

Sarin received 8.1 million share options under the scheme in the year to March 31 on top of £3.2m in salary and annual bonuses, according to Vodafone's latest annual report.

Bond said the reduction came in an environment of falling mobile costs, while Vodafone's Indian acquisition of Hutchinson Essar earlier this year would also depress earnings per share.

The board did face a broadside from a representative of 1000 members of the Communication Workers Union in South Africa, who alleged that local joint venture Vodacom has refused the union bargaining rights. In a flyer distributed before the meeting, the union accused Vodacom of "terrorist tactics", including sacking union activists and seeking High Court warrants for the arrest of pickets.