WPP chief Sir Martin Sorrell left stunned by revolt over £13m pay
Sixty per cent of ad giant's shareholders vote against bumper package for boss
Thursday 14 June 2012
The advertising giant WPP is reeling after 60 per cent of shareholders voted against its chief executive Sir Martin Sorrell's controversial £13m pay deal.
While yesterday's revolt was expected, the full extent appeared to stun the board directors as they watched the results appear on TV screens at the annual meeting in Dublin.
This is just the latest big vote against pay at a top FTSE 100 company after similar protests at Aviva, Cairn Energy, Pendragon and Trinity Mirror in what is being dubbed the Shareholder Spring.
Sir Martin, one of Britain's most respected captains of industry, looked subdued and grim faced.
Jeffrey Rosen, the chairman of the remuneration committee, wore a particularly anguished expression. Nearly 22 per cent of shareholders voted against his re-election. Two other non-executives, Koichiro Naganuma and Ruigang Li, faced votes against of nearly 30 per cent. But Sir Martin won the backing of 98 per cent.
But investors were furious about his package because it 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.
Several influential shareholder advisory groups, including ISS and Pirc, recommended a vote against.
Close to 42 per cent of shareholders opposed the remuneration report last year, when anger was focused on the pay of digital boss Mark Read.
Louise Rouse, of the pressure group Fair Pensions, who spoke from the floor, asked the directors why "in the light of the warning that shareholders issued last year, we're facing another significant protest vote?" No other shareholder spoke as few had travelled to Dublin, where WPP relocated for tax reasons in 2008.
A Pirc spokesman said: "It is very important that, as a high-profile FTSE 100 company, WPP responds constructively to the vote. This is a key moment in the relationship between shareholders and companies over top pay."
Votes at UK-listed companies are non-binding but the result was still a huge embarrassment for the world's biggest advertising group.
WPP, whose agencies give public relations and marketing advice to hundreds of top companies, admitted that it had failed to communicate effectively with shareholders.
The chairman, Philip Lader, a former US ambassador to London, closed the AGM by saying: "We take the remuneration report vote seriously.
"We'll communicate with many shareholders and we'll move forward in the best interests of our shareholders and the business."
Mr Rosen said: "I think if we take anything away from this, it is to have more continuous discussions with shareholders."
He added: "This is an economic environment in which it is particularly important and difficult to formulate the right long-term policies for the company in terms of compensation."
Sir Martin made no comment on the pay row in a 30-minute presentation, but noted pointedly how the group's profits and shareholder value have surged during his 27 years at the helm.
WPP argues he deserves his pay after building the group from scratch in 1985 into a £10bn business, which owns agencies such as Ogilvy & Mather and J Walter Thompson.
The company claims some shareholder advisory groups are inconsistent because they have criticised Sir Martin's pay but have been happy to see bosses at rival US ad groups earn similar-sized packages.
Ad man: Boss with 'skin in the game'
Sir Martin Sorrell is likely to have made well in excess of £200m during his 27-year reign at WPP.
He is worth £174m, according to the 2012 Sunday Times Rich List, which estimated his wealth had risen from £148m a year earlier.
Sir Martin's controversial pay last year was £13m.
His basic salary rose from £1m to £1.3m, with £459,000 in benefits such as car and spouse travel. But his total package was worth much more because of both short-term cash bonuses and long-term share awards, which take five years to vest.
WPP says his pay is aligned with the interests of the £10bn company as Sir Martin co-invests his own money alongside the shares he receives.
Sir Martin, 67, owns around 1.4 per cent. "I have skin in the game," he likes to say.
When he split from his first wife, Sandra, the 2005 legal settlement cost him £30m.
He took over WPP in 1985 and was already wealthy after serving as finance director for Saatchi & Saatchi in its heyday.
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