WPP investors deliver stinging rebuke to Sorrell over 3-year deal

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The Independent Online
Sir Martin Sorrell, the chief executive of WPP, yesterday suffered one of the most humiliating rebukes in the current row about excessive boardroom pay when nearly half of WPP's shareholders refused to back his controversial three-year contract. This was the only challenge shareholders made to the company, approving everything else.</p>The result - which saw 46 per cent of investors opposing or abstaining in the vote on WPP's remuneration report - is highly embarrassing for the company and means it ranks as one of the most high-profile bust-ups between boards and shareholders over pay.</p>The revolt at the advertising giant is the largest since 51 per cent of GlaxoSmithKline's shareholders rejected Jean-Pierre Garnier's £22m golden parachute. Other high profile clashes have been at Shire Pharmaceuticals, Tesco and Royal &amp; SunAlliance.</p>The vote puts the company under considerable pressure to bring Sir Martin's contract into line with arrangements at other major UK companies.</p>A spokesperson for the National Association of Pension Funds said: "It is difficult to see how the company could not take account of shareholder wishes when the level of the vote was as great as it was."</p>Sir Martin refused to comment on his own package, but Bud Morten, who chairs the remuneration committee, claimed the vote was "constructive". "People should step up and speak their minds," Mr Morten said.</p>He said WPP was due to revise its directors' contracts later this year and indicated that the company would take account of the current backlash against long severance terms and lavish pay packages for top executives.</p>But Mr Morten added: "You can pound down on severance, but if you want David Beckham, you have got to find another way to incentivise."</p>Contrary to popular belief, Sir Martin would not actually walk away with three years' salary if he were fired tomorrow. While his contract is a three-year one, his severance terms only entitle him to a maximum of two-years' salary and pension contributions. However, if he were wrongfully fired, he would get two years' of his "target bonus" on top of that.</p>Last year he received £1.59m in salary and bonus. His share options are worth £65m, according to shareholder lobbyists Pirc, though Sir Martin has never cashed in any of his WPP shares.</p>WPP, which does more than 40 per cent of its business in America, admitted that a considerable number of its senior managers below board level were on three-year contracts, which are more acceptable in the US. One board member other than Sir Martin, Howard Paster, also has a contract that does not expire until December 2005 but after that it reduces to a six-month notice period.</p>Separately, Sir Martin, who is well-known for his love of doing deals, ruled out increasing his offer for rival Cordiant, disappointing many of those investors who have rushed to buy shares in the company in the hope that WPP would sweeten the equity part of its offer.</p>"We've been quite clear about our offer," Sir Martin said after the AGM. "That's it. Our offer is our offer."</p>In a statement released later, WPP confirmed it did not intend to revise its terms in the offer document sent out to Cordiant shareholders last week, offering one WPP share for every 205 Cordiant shares. </p>

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