Sir Martin Sorrell, the chief executive of the advertising giant WPP, is set to face shareholder ire over a new long-term pay deal that could see him awarded £34m.
Shareholders in WPP are being asked to approve a new four-year incentive plan at an extraordinary meeting on 7 April. The company has been sweet-talking shareholders over the plan for some time, but some have balked at the potential for multimillion-pound awards.
Final details of the new long-term scheme were sent to shareholders last week and Pirc, the corporate governance consultancy, believes the scheme to be excessive and is telling its members to vote against it. Pirc opposed Sir Martin's current incentive plan, which the company now wants to replace. Sir Martin is in line for a £17m windfall from the existing scheme in September.
The new plan will see 19 senior executives sharing up to £112.5m if they hit performance targets. Sir Martin will have to invest up to £7m of his own money into the scheme, which the board will argue is a significant alignment of his and the company's interests. It is also understood that Rrev, the corporate governance voting service for US investors set up in partnership with the National Association of Pension Funds, will not object to the incentive plan, which means it is likely to be approved without too much resistance.
The Napf, a powerful shareholder organisation, has not opposed the scheme, but has said it will look at it in detail as part of Sir Martin's wider remuneration package.
At last year's annual meeting, WPP endured a major shareholder rebellion over Sir Martin's three-year contract. Nearly half of WPP's shareholders refused to vote in favour of the group's remuneration report after the intervention of the Napf and other lobbying groups. Sir Martin has since given in to pressure and reduced the contract, which would have secured him a multimillion-pound payout if he was sacked or the company was taken over. He is now entitled to a two-year pay-off, which falls to one year from April 2005, bringing him in line with corporate governance codes. He was paid £1.5m in 2002 in salary and bonuses, and had £336,000 paid into his pension fund.
After a string of high-profile clashes between investors and boardrooms over issues such as excessive pay, representatives from both sides of the City are this week meeting to call a truce on public disputes. The Investment Management Association and the Confederation of British Industry are hosting the dinner at London's RAC Club tonight.Reuse content