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Sir Martin Sorrell at sharp end of investor revolt at WPP AGM Sir Martin Sorrell at sharp end of investor revolt at WPP AGM
(about 1 hour later)
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.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.
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.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.
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. The vote indicates a sizeable shareholder revolt, although it 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.
Deborah Gilshan, corporate governance counsel at the Railways Pension Scheme, said at the annual meeting in London that pay at WPP was out of line with the interests of shareholders and other stakeholders in the company and was “a risk to its reputation and licence to operate” from society. Shareholders who voted against Sorrell’s pay package – one of the biggest in British corporate history – included Standard Life and Hermes. Both also expressed impatience with the progress made on succession planning for the 71-year-old. Hermes described Sorrell’s pay as excessive.
Euan Stirling, of Standard Life Investments, said at the annual meeting in London: “The current policy could result in the chief executive receiving over 15 times his base salary of more than £1m should all the performance conditions be met. 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 out of line with the interests of shareholders and other stakeholders in the company and was “a risk to its reputation and licence to operate” from society.
She added: “We continue to question the logic of the board and its compensation committee to [determine] pay to motivate, incentivise and retain the CEO and other senior executives.”She added: “We continue to question the logic of the board and its compensation committee to [determine] pay to motivate, incentivise and retain the CEO and other senior executives.”
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 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.”
Another 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.” Another 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.”
Sorrell, the highest-paid boss of any FTSE firm, told the annual meeting that people forget that he reinvests his pay into WPP. Sir John Hood, who chairs WPP’s remuneration committee, said it would talk to shareholders to hammer out a deal. Sorrell, the highest-paid boss of any FTSE firm, told the annual meeting that people forgot he reinvested his pay into WPP.
Hood had previously 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. 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 more conservative plan was introduced in 2014 and approved by about 80% of shareholders.
Shareholders who voted against the pay package included Standard Life and Hermes. Hermes said ahead of the meeting that Sorrell’s pay was excessive and also expressed impatience with the progress made on succession planning for the 71-year-old. He said the company would consider how share plans might play out after its 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.
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”. But he added: “We will of course be consulting with our major shareholders as we move forward to consider our policy document that we will present to shareholders next year.” He said the board would try to include concerns in the pay policy so that a significant majority would support it. The vote on the pay policy, presented every three years, is binding.
Hood had previously 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 the advertising agencies JWT and Ogilvy & Mather.