Sir Martin Sorrell and the board of WPP faced a barrage of criticism at their annual general meeting after a third of shareholders opposed the £70m pay package handed to Sorrell, chief executive of the world’s biggest advertising company.
At the AGM in London, 33.5% of shareholders voted against WPP’s remuneration report and 66.5% backed it. Including abstentions 34.2% of investors failed to support the report. The vote was the third worst suffered by WPP, where Sorrell’s pay has irked shareholders for many years.
Standard Life and Hermes, two of Britain’s most influential fund managers, voted against the pay report and sent senior officers to the meeting.
Euan Stirling, head of corporate governance at Standard Life, said WPP’s current pay plan could hand Sorrell more than 15 times his £1.15m salary. “We expect that is more than would be required to recruit, retain or motivate even someone with the redoubtable talents of Mr Sorrell.”
Deborah Gilshan, corporate governance counsel at the Railways Pension Scheme, said pay at WPP was “a risk to its reputation and its licence to operate” from society.
The WPP chairman, Roberto Quarta, told Gilshan: “Rest assured we hear your comments and your voice today and certainly we will take them into account as we … consult at the end of the year.”
The revolt over Sorrell’s pay is the latest in a string of defeats and bruising protests for company boards this year. Starting with the 60% vote against BP boss Bob Dudley’s £14m pay two months ago, big shareholders have taken issue with the size of some executive pay deals.
Quarta said WPP would take account of investors’ change of mood as the company puts together a new pay policy for a binding vote next year.
Sorrell, 71, who started WPP from scratch using borrowed money in 1985, said the idea from the start was that he would have a big stake in the company and run it as an owner. He has reinvested all his pay into WPP and only took money out to pay for his divorce in 2005.
“WPP by virtue of that is unique and should be looked at in a unique way,” he said after the meeting. “If there is something wrong with building a company from two people to 194,000 people where 600,000 people depend on WPP for their livelihoods then mea culpa.”
A small shareholder said questions on pay were pathetic and asked by small-minded people. “It has all been agreed so I don’t know what they’re carping at.” But another said Sorrell’s dominance of the company meant the board bent to his will because they feared him leaving.
Sir John Hood, who chairs WPP’s remuneration committee, said 89% of Sorrell’s share pay was under the incentive plan agreed at the 2009 annual meeting and that a less generous plan was approved by about 80% of shareholders two years ago.
He said the company would consider how share plans might play out after WPP’s market value doubled in five years, triggering the big payout. He also said WPP had to pay the rate needed to get the best people in a competitive market.
