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WPP faces backlash over Sir Martin Sorrell pay deal WPP faces backlash over Sir Martin Sorrell pay deal
(about 1 hour later)
Advertising group WPP faces a shareholder revolt over its executive pay report, which includes a £6.8m deal for chief executive Sir Martin Sorrell.Advertising group WPP faces a shareholder revolt over its executive pay report, which includes a £6.8m deal for chief executive Sir Martin Sorrell.
Sir Martin's pay package marks a 60% rise on the previous year.Sir Martin's pay package marks a 60% rise on the previous year.
Shareholder advisory body Pirc, who is urging members to vote against the deal citing concerns over "excessiveness", said it looked likely the remuneration report would be defeated.Shareholder advisory body Pirc, who is urging members to vote against the deal citing concerns over "excessiveness", said it looked likely the remuneration report would be defeated.
The company is the latest to suffer investor discontent over executive pay.The company is the latest to suffer investor discontent over executive pay.
Others who have faced shareholder rebellions include Aviva, Trinity Mirror and AstraZeneca - all of whom announced the departures of their chief executives as a result of investor pressure.Others who have faced shareholder rebellions include Aviva, Trinity Mirror and AstraZeneca - all of whom announced the departures of their chief executives as a result of investor pressure.
Sir Martin says WPP's pay decisions "reward performance, not failure".Sir Martin says WPP's pay decisions "reward performance, not failure".
A recent report by proxy voting agency Manifest, showed the typical pay of bosses at the majority of the UK's largest publicly listed companies rose 11% last year to £3.65m.A recent report by proxy voting agency Manifest, showed the typical pay of bosses at the majority of the UK's largest publicly listed companies rose 11% last year to £3.65m.
A shareholder vote on WPP's proposed remuneration report will take place at the group's annual meeting in Dublin on Wednesday.A shareholder vote on WPP's proposed remuneration report will take place at the group's annual meeting in Dublin on Wednesday.
'Poor record''Poor record'
The pay package for Sir Martin is made up of a £1.3m salary, a £2m annual bonus and £3m in deferred shares and other benefits.The pay package for Sir Martin is made up of a £1.3m salary, a £2m annual bonus and £3m in deferred shares and other benefits.
Pirc has raised concerns over "excessiveness and the balance between reward and incentive".Pirc has raised concerns over "excessiveness and the balance between reward and incentive".
In its report on WPP which it sent out to members, it cites the company's "poor acquisition record", which has led to £1.3bn of write-offs.In its report on WPP which it sent out to members, it cites the company's "poor acquisition record", which has led to £1.3bn of write-offs.
It also pointed out that there has been some unhappiness over executive pay for a while, as nearly 42% of shareholders voted against WPP's remuneration report last year.It also pointed out that there has been some unhappiness over executive pay for a while, as nearly 42% of shareholders voted against WPP's remuneration report last year.
In addition, Pirc is opposing the re-election of Jeffrey Rosen as chairman of the remuneration committee, saying he should be held accountable for awarding an "overly excessive" pay package for Sir Martin.In addition, Pirc is opposing the re-election of Jeffrey Rosen as chairman of the remuneration committee, saying he should be held accountable for awarding an "overly excessive" pay package for Sir Martin.
The Association of British Insurers (ABI), whose members include the biggest institutional investors in the City, has issued a "red top" alert over WPP's pay report, its strongest possible warning.The Association of British Insurers (ABI), whose members include the biggest institutional investors in the City, has issued a "red top" alert over WPP's pay report, its strongest possible warning.
Richard Dunbar, investment director at Scottish Widows, which owns 3.5% of WPP shares, told the BBC that his firm would be voting against WPP's latest executive pay report.Richard Dunbar, investment director at Scottish Widows, which owns 3.5% of WPP shares, told the BBC that his firm would be voting against WPP's latest executive pay report.
"Our principles are that we want to attract and maintain the best talents in the companies in which we are invested, and pay enough to do this, but no more than that," he said."Our principles are that we want to attract and maintain the best talents in the companies in which we are invested, and pay enough to do this, but no more than that," he said.
"And we want to incentivise management teams to make decisions in the long term interests of shareholders, our clients.""And we want to incentivise management teams to make decisions in the long term interests of shareholders, our clients."
'Right decisions''Right decisions'
But Sir Martin, who founded WPP in 1985, has defended the package, pointing to the company's £1bn record profit last year, and says he finds the controversy over his compensation "deeply disturbing".But Sir Martin, who founded WPP in 1985, has defended the package, pointing to the company's £1bn record profit last year, and says he finds the controversy over his compensation "deeply disturbing".
Writing in the Financial Times last week Sir Martin said: "WPP has a very independently-minded board and compensation committee, which makes decisions that they believe are in the long-term interests of the company and its shareholders, of which I am one.Writing in the Financial Times last week Sir Martin said: "WPP has a very independently-minded board and compensation committee, which makes decisions that they believe are in the long-term interests of the company and its shareholders, of which I am one.
"The board's compensation decisions are right because they reward performance, not failure, reject options in favour of a long-term incentive scheme with co-investment and five-year performance periods, and are competitively fair against our big US and French competitors, which we consistently outperform.""The board's compensation decisions are right because they reward performance, not failure, reject options in favour of a long-term incentive scheme with co-investment and five-year performance periods, and are competitively fair against our big US and French competitors, which we consistently outperform."
While there has been a lot of focus on the debate over high executive pay, BBC business editor Robert Peston says the so-called "shareholder spring" of investor uprisings may not really exist.While there has been a lot of focus on the debate over high executive pay, BBC business editor Robert Peston says the so-called "shareholder spring" of investor uprisings may not really exist.
He points to the fact that there have been just four defeats so far of companies in votes on their remuneration reports, and only one of those companies was in the FTSE 100.He points to the fact that there have been just four defeats so far of companies in votes on their remuneration reports, and only one of those companies was in the FTSE 100.
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