Scrutiny for Sorrell after AGM rebuke

Click to follow
The Independent Online

WPP is to review Sir Martin Sorrell's three-year contract after what is expected to be a rebuke by shareholders at tomorrow's AGM.

A large proportion of investors in the advertising group are expected to refuse to back its remuneration report because of the chief executive's three-year fixed-term contract with the company. It is expected that up to a third of those attending will abstain or vote against the report.

However, WPP's compensation committee - made up of Bud Morten, Philip Lader and Christopher Mackenzie - is due to review Sir Martin's contract in August, when it will have two years to run.

This will coincide with the start of what are expected to be intensive talks about a new incentive plan. This will replace the existing Leadership Equity Acquisition Plan (Leap), which has promised up to $50m (£30m) for Sir Martin and a similar amount for 14 other executives. The new scheme is likely to pay out a fraction of that.

WPP is currently bidding £266m for rival Cordiant and faces a stand-off with shareholder Active Value, which has bought more than 25 per cent of Cordiant in order to block the deal.

In turn, WPP has bought up a large proportion of the debt in the troubled advertiser and is now threatening to force Cordiant into administration if Active Value does not relent.

The row over Sir Martin's contract is the latest in a series of battles between investors and companies over executive contracts.

EMI, the music group, hopes to avoid a similar row at its AGM next month, despite revelations of massive potential payoffs for directors.

The group, the subject of bid speculation for the past three years, revealed that directors would get a payoff worth two years of their contracts if EMI were taken over. According to Manifest, the corporate governance experts, this would entitle Martin Bandier, boss of EMI publish- ing, to a windfall worth £10.4m. Chief executive Alain Levy would get at least £3.1m.