WPP scrambles to adjust Sorrell's pay plan

WPP, the advertising company, was last night scrambling to adjust the controversial pounds 30m pay scheme for its chief executive, Martin Sorrell, in a bid to win broad support from increasingly hostile institutions.

But the list of shareholders planning to vote against the plan grew longer as Royal Life confirmed yesterday that it had already sent in a "no" vote by proxy.

"The company explained the plan at great length," Richard Lehman, head of UK equities at Royal, said. "But at the end of the day, we have voted against." Mr Lehman said the amount Mr Sorrell stood to receive - as much as pounds 30.6m over five years if performance targets were met - was "simply too high". Royal owns 1.7 per cent of WPP's shares.

Other institutions intending to vote against the plan at Monday's extraordinary meeting include Standard Life, Hermes, Norwich Union and Fleming. Taken together, the dissenting investors control 13 per cent of WPP.

Standard's Guy Jubb, head of corporate governance, said the institution was holding out for a more direct link between Mr Sorrell's remuneration and WPP's financial performance. As presently formulated, the main component of Mr Sorrell's performance-related pay is linked to WPP's share price performance.

US investors are thought to be more amenable to the package, which was developed largely by reference to US-based advertising companies with a similar international profile. Sources at WPP said that US institutions voting by proxy were overwhelmingly in favour of the package - swayed, perhaps, by a recommendation from the respected US shareholder advisory firm Institutional Shareholder Services that the plan be approved.

Royal's Mr Lehman said he would be pleased to consider further revisions to the plan, but expected that discussions would now have to take place after Monday's meeting, when the part of the scheme directly linked to share price increases is to be put to a vote.

WPP and Mr Sorrell told institutions yesterday they would be willing to make changes to the pay package, as detailed in yesterday's Independent.

"These are small steps in the right direction, but not enough," said Mr Jubb.

WPP's remunerations committee met institutional shareholders last night and the company said it expected to issue a release detailing changes to the compensation package today.