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Sir Martin Sorrell pay deal faces investor revolt at WPP AGM Sir Martin Sorrell at sharp end of investor revolt at WPP AGM
(about 2 hours later)
Advertising giant WPP is expected to face a backlash from shareholders at its annual meeting over the £70m pay package it has handed to Sir Martin Sorrell, its chief executive and founder. More than a third of shareholders at the advertising giant WPP have refused to back the £70m pay package handed to its boss, Sir Martin Sorrell.
It is one of the biggest pay cheques in UK corporate history. In April, Sir John Hood, chairman of the WPP remuneration committee, defended the £70.4m cash and shares package for 2015 as the “result of an outstanding set of returns to share owners”. Including abstentions, 34.2% of WPP investors failed to support the company’s pay report at the company’s annual general meeting in London, while 65.8% backed it.
But some investors are not impressed. Asset manager Hermes, a WPP shareholder, said Sorrell’s pay was excessive and also expressed impatience with the progress made on succession planning for the 71-year-old. The vote indicates a sizeable shareholder revolt, although it is does not match that seen at BP, where almost 60% of investors voted against the £14m pay package of its chief executive, Bob Dudley, after the oil group posted an annual loss of £3.6bn.
Investor advisory body Pirc has advised shareholders to vote against Sorrell’s pay package. It noted that his variable pay amounted to 58 times his £1.2m salary, while the pay ratio compared with the average employee at WPP was “highly excessive at 196:1”. He is the highest paid boss of any FTSE firm. In April, Sir John Hood, chairman of the WPP remuneration committee, defended Sorrell’s £70.4m cash and shares package for 2015 as the “result of an outstanding set of returns to share owners” of the group, which owns advertising agencies JWT and Ogilvy & Mather. It is one of the biggest pay cheques in UK corporate history.
Other major companies have faced shareholder rebellions over executive pay in recent months. One of the biggest was at BP, where almost 60% of investors voted against the £14m pay package of its chief executive, Bob Dudley, after the oil group posted an annual loss of £3.6bn. Asset manager Hermes, a WPP shareholder, said Sorrell’s pay was excessive and also expressed impatience with the progress made on succession planning for the 71-year-old.
WPP, which owns advertising agencies JWT and Ogilvy & Mather, is holding its annual meeting at noon in London. Investor advisory body Pirc had advised shareholders to vote against Sorrell’s pay package. It noted that his variable pay amounted to 58 times his £1.2m salary, while the pay ratio compared with the average employee at WPP was “highly excessive at 196:1”. He is the highest paid boss of any FTSE firm.
Hans-Christoph Hirt, the co-head of Hermes EOS, said: “Even considering the strong performance and pay practices at peers, the legacy equity incentive plan introduced in 2009 has once again led to what we regard as an excessive level of CEO remuneration for 2015.Hans-Christoph Hirt, the co-head of Hermes EOS, said: “Even considering the strong performance and pay practices at peers, the legacy equity incentive plan introduced in 2009 has once again led to what we regard as an excessive level of CEO remuneration for 2015.
“We appreciate that a new remuneration policy was approved by shareholders in 2013 and that the legacy plan only has one more year to run. Nonetheless, we are highly uncomfortable with the 2015 quantum, not least in light of our historic concerns about board composition and the remuneration committee’s apparent lack of vigour and stress-testing when the legacy plan was devised.”“We appreciate that a new remuneration policy was approved by shareholders in 2013 and that the legacy plan only has one more year to run. Nonetheless, we are highly uncomfortable with the 2015 quantum, not least in light of our historic concerns about board composition and the remuneration committee’s apparent lack of vigour and stress-testing when the legacy plan was devised.”
Hirt is also concerned about who might succeed Sorrell, who he said had created “remarkable value” since setting up the company in 1985. “He is rightly regarded as one of the most successful entrepreneurs and business leaders in the world,” he said.Hirt is also concerned about who might succeed Sorrell, who he said had created “remarkable value” since setting up the company in 1985. “He is rightly regarded as one of the most successful entrepreneurs and business leaders in the world,” he said.