Sir Martin Sorrell’s remuneration package drew another large protest vote from shareholders at WPP’s annual meeting, with a fifth rejecting the payout.
Around 22 per cent failed to back the £43m package for the chief executive and founder of the advertising and marketing conglomerate. Just under 20 per cent voted against while 2 per cent abstained.
The payout represents a 43 per cent increase on last year’s £30m package and makes Sir Martin easily the highest-paid boss of a public British company.
The revolt was down on last year’s 30 per cent rejection rate of Sir Martin’s pay, and the 60 per cent opposition in 2012, but the board’s outgoing chairman, Philip Lader, was again compelled to justify the payout at length.
“[It’s] certainly a large quantum but 92 per cent of that amount was variable and is performance based… it’s equivalent to one third of 1 per cent of the increase in value to our shareholders over this five-year period,” he said.
Mr Lader also stressed that the payout comes under a long-term remuneration plan that had been overwhelmingly signed off by WPP shareholders and that the board has no alternative but to make the payments. “Sir Martin’s remuneration was a contractual obligation” he stressed.
But a spokesman for Pirc, one of the shareholder advisory bodies that had opposed the payout, said: “There has been continued disquiet over remuneration at WPP for some years now.… To say now that it’s a contractual obligation seems like trying to deflect the long-term disquiet.”
Standard Life, which controls 22 million WPP shares on behalf of clients, was one of the other institutional managers that rejected Sir Martin’s payout. Guy Jubb, its global head of governance and stewardship, also issued a warning about the “Sorrellcentricity” of WPP.
“We have been concerned for some time by the perception that Sir Martin has the potential to dominate the board’s decision-taking,” he said. He also criticised a “lack of transparency” over the board’s succession planning. A new incentive scheme for senior executives was introduced last year, but the old one has two years left to run.
One small shareholder pointed to the 12 per cent dividend increase last year, saying “[Sir Martin] is worth every penny. If you don’t like what the board’s doing, sell the shares!”
Mr Sorrell’s total pay package comprised £1.15m in salary, a £3.6m short-term bonus and £36m of shares from the long-term incentive plan. He also received £453,000 in benefits – including £274,000 for his wife to accompany him on business trips.