Shareholders vote against WPP boss pay package

 

Advertising boss Sir Martin Sorrell suffered a major rebuke today in one of the biggest pay revolts of the current "shareholder spring".

Some 59.5 per cent of proxy investor votes went against WPP's remuneration report, which includes a £6.8 million package for Sir Martin, which he has defended as a reward for "performance, not failure".

The vote, revealed at WPP's annual meeting in Dublin, is not binding and will not force WPP to reset its pay policy for last year.

Louise Rouse, director of engagement at investment campaigner FairPensions, who attended the meeting, said: "It is difficult to know whether the WPP board underestimated the level of shareholder anger or simply chose to ignore it."

WPP owns dozens of companies including public relations firm Ogilvy, communications agency RLM Finsbury and market research firm Kantar Worldpanel.

The backlash follows months of shareholder anger over executive pay with the likes of Aviva, Trinity Mirror, Barclays, William Hill, Xstrata and Premier Foods all facing significant votes against their pay reports.

The vote against the pay report is one of the largest this year, only being beaten by the level of dissent at Cairn Energy, Pendragon and Centamin.

Chairman Philip Lader, a former White House deputy chief of staff, told the meeting: "We take the remuneration report vote very seriously. We'll consult with many share owners and will then move forward in the best interests of our share owners and our business."

Sir Martin, who founded WPP in 1985 and has invested and co-invested millions of pounds into the company, has defended the deal as reflective of his performance, after the group reported bottom-line profits of £1 billion for the first time in 2011.

The businessman's pay package is made up of £1.3 million salary, £2 million annual bonus, £3 million deferred shares and other benefits.

On top of the annual remuneration, Sir Martin received nearly £6 million in shares last year, although these were awarded in 2006 and were closely-tied to performance targets, pension contributions and more than £1.3 million in dividend equivalents.

Shareholder advisory groups, including the Association of British Insurers (ABI) and Pensions Investment Research Consultants (Pirc), last week urged members not to back the advertising group's "excessive" remuneration report.

Pirc said it was concerned by "excessiveness and the balance between reward and incentive".

Writing in the Financial Times last week, Sir Martin issued a robust defence of his pay, warning that if Britain wanted high achievers in the private sector, it needed to pay competitively.

He told the paper: "The compensation debate in the UK now seems to have shifted from undeserving bankers paid for failure and from payment for performance to what is fair pay."

Other casualties of the so-called shareholder spring have included Andrew Moss, who quit as chief executive of Aviva, and Sly Bailey, who will leave her post as boss of Trinity Mirror.

Business Secretary Vince Cable is currently drawing up plans to give greater power to shareholders but is understood to be considering watering down proposals for a binding annual vote in favour of a poll every three years.

It had been feared that a binding annual vote would make investors less inclined to protest in case they destabilised management teams and would add to bureaucracy.

PA

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