WPP eyes move to New York

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Martin Sorrell, chief executive of WPP, is considering moving the advertising group's headquarters from London to New York, irrespective of the outcome of a vote on his pay package at the company's annual meeting next week.

Weekend reports said the company may relocate to New York if the pay deal, reported to be worth pounds 35m over five years, is overturned. But sources say the company is considering moving for commercial reasons unconnected with the vote.

Most of WPP's key clients, including IBM, Kodak, Ford and American Express, are based in the US. The US accounts for 40 per cent of the company's turnover. Four fifths of the company's turnover comes from outside the UK.

Three quarters of WPP's turnover comes from operating companies based in the US - J Walter Thompson, Ogilvy & Mather, Reinhart and Hill & Knowlton.

It is unlikely that the company would completely de-list from the London Stock Market, but it is considering a listing in the US, possibly on Nasdaq. A quarter of WPP's shareholders are American.

One source said: "Martin spends half of his time in the US.His family has reached a stage, and he personally may have reached a point, when it would be appropriate to move."

The source played down the significance of a City campaign by two large shareholders, Fleming Investment Management and Hermes, which manages the Post Office's and BT's pension funds, to overturn Mr Sorrell's planned pay deal.

It was also claimed WPP had told its 12 biggest investors about the proposed pay package, ten of whom raised no objection.

Fleming Investment Management has twice increased its stake in the company after having been briefed on the pay deal plans. Since the new scheme was made known to investors last September, Fleming's stake has risen from around 6 per cent to 7.5 per cent of the company.

The second lift in Fleming's stake was made after Fleming director John Emly had written to WPP to complain about the pay deal.

Under terms of the deal, Mr Sorrell could in theory make up to pounds 35m, although the company claims that is unlikely. The level of bonus actually paid depends on the company meeting performance targets.

The rules of what the company calls its "capital incentive scheme" mean Mr Sorrell's payments are stepped in line with the company's performance. To trigger the maximum payout, the company's share price must rise from Friday's close of 122p to 304p and stay at that level for sixty days. This would take the market capitalisation of the company from pounds 850m at the moment to nearer pounds 2.4bn. Other large payments are possible under both WPP's long- and short-term bonus schemes.