Leading shareholders in the advertising giant WPP have warned its chief executive, Sir Martin Sorrell, that he faces another nasty battle with them unless he agrees to a significant pay cut.
Sir Martin received a bloody nose over his pay during the shareholder spring, though his record meant that he did not end up being pushed out like Sly Bailey at Trinity Mirror and David Brennan at AstraZeneca.
Sources close to the group's board say Sir Martin is refusing to back down over the issue, despite seeing his £13m pay package voted down by investors in June. Sir Martin continues to insist that he is underpaid compared to his global rivals, having created a spawling media services empire that includes the public relations group Burson-Marsteller and the New York-based media buyer MEC.
Sir Martin's stance has become known to major investors, who warn that the 67-year-old is "pushing his luck". He also suffered a substantial vote against his remuneration in 2011.
"He doesn't seem to grasp that the shareholder environment has changed," one large institutional investor told The Independent. "The company has had a good run, but he needs to keep investors onside – otherwise there's going to be more kick-back."
Overall, 60 per cent of WPP failed to back Sir Martin's pay at the annual meeting in Dublin. However, the vote was non-binding, meaning he still picked up the £13m package, which included a 30 per cent rise in his basic salary to £1.3m and an increase in his long-term bonus to 500 per cent of salary.
Following the meeting, Sir Martin admitted that WPP had "misjudged the mood of shareholders". However, investors say he continues to risk falling out of favour with them, regardless of having built a £10bn business from scratch.
"We are grateful for the fact that he's grown WPP into a world champion, but he doesn't seem to realise that we own the company, not him," another shareholder said. "He has a stake in the group, of course, but so do a lot of other investors, who will not accept his pay demands unless they are lowered considerably."
In response, WPP said Philip Lader, the group's chairman, and Jeffrey Rosen, head of its remuneration committee, have been consulting with shareholders over executive pay. The company confirmed that no decision had yet been taken over Sir Martin's next pay package.
Mr Lader added: "Jeffrey and I have met with shareowners during an extensive listening tour to discern their specific views. After thorough board discussion of this shareowner input, we have initiated a second round of consultation, which will be reflected in actions to be taken by the board and presented to next year's AGM. This is an active, current process, with input being taken seriously, but [there are] no conclusions at this time."