WPP tries to calm City over fears of ITV-style bonanza for Sorrell

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The Independent Online

WPP is set to run into more trouble this week after it emerged that the new pay scheme could give chief executive Sir Martin Sorrell a windfall of up to £44m if the giant advertising group were taken over.

WPP is set to run into more trouble this week after it emerged that the new pay scheme could give chief executive Sir Martin Sorrell a windfall of up to £44m if the giant advertising group were taken over.

Shareholders have expressed their "significant concern" over the company's change of control provisions, which could see Sir Martin and other executives being paid out in full.

They are anxious to avoid the ITV fiasco, in which Carlton's former chief executive, Michael Green, stands to gain £15m from its merger with Granada.

WPP offered an olive branch to shareholders last week when it wrote to the Association of British Insurers indicating that, in case of a change of control, share options granted as part of the executive remuneration scheme would not necessarily vest in full.

"The remuneration committee is very sensitive to the importance of the fairness rule in the context of any vesting which might be triggered by a change of control," the letter said. "The resulting position would be to scale back in time. If we were not to do so, payments would be made which would not in the opinion of the committee reflect management performance over the investment and performance period."

But shareholders will still press WPP for further clarification at this week's extraordinary general meeting being held to approve the new £112.5m pay scheme.

After shareholder objections earlier this month, WPP changed the new weighting system it wanted to introduce for the comparator companies it uses to help measure its performance. It postponed the original extraordinary general meeting until this week.

One of its top five shareholders said it was unlikely that shareholders would vote against the amended pay scheme: "We have found the company to be responsive in terms of addressing shareholder concerns. But we need clarification on the change of control provisions."

Michael McKersie, the manager of investment affairs at the ABI, said: "The Carlton situation demonstrated that we need to be very clear about change of control provisions."

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