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| WPP shareholders approve Sir Martin Sorrell's pay package | WPP shareholders approve Sir Martin Sorrell's pay package |
| (4 months later) | |
| Sir Martin Sorrell has weathered shareholder unrest over his controversial £17.6m pay package, with just over 26% of investors voting against or withholding their vote in protest at his remuneration at WPP's annual general meeting. | Sir Martin Sorrell has weathered shareholder unrest over his controversial £17.6m pay package, with just over 26% of investors voting against or withholding their vote in protest at his remuneration at WPP's annual general meeting. |
| After last year's humiliating AGM defeat over the WPP chief executive's remuneration, Sorrell's revised pay and bonus package proved more acceptable to the company's shareholders at the 2013 meeting on Wednesday, with more than 70% voting to approve it. | After last year's humiliating AGM defeat over the WPP chief executive's remuneration, Sorrell's revised pay and bonus package proved more acceptable to the company's shareholders at the 2013 meeting on Wednesday, with more than 70% voting to approve it. |
| Since last year's defeat, WPP's board has held extensive negotiations with shareholders to attempt to restructure Sorrell's remuneration in a way that would be palatable to disgruntled investors. | Since last year's defeat, WPP's board has held extensive negotiations with shareholders to attempt to restructure Sorrell's remuneration in a way that would be palatable to disgruntled investors. |
| In April, the company revealed that Sorrell would accept measures including a £150,000 pay cut, a more than 20% cut to his maximum potential bonus and the replacement of the highly-controversial 'leadership equity acquisition plan' (LEAP) long-term incentive scheme with a more stringent plan. | In April, the company revealed that Sorrell would accept measures including a £150,000 pay cut, a more than 20% cut to his maximum potential bonus and the replacement of the highly-controversial 'leadership equity acquisition plan' (LEAP) long-term incentive scheme with a more stringent plan. |
| Last year, nearly 60% of WPP investors rejected Sorrell's pay packet in what was dubbed the "shareholder spring". | Last year, nearly 60% of WPP investors rejected Sorrell's pay packet in what was dubbed the "shareholder spring". |
| On Wednesday, almost 18% of investors opposed the WPP directors' remuneration report. Almost 9% of votes were withheld, usually a sign that investors are protesting at a resolution. Almost 16% of WPP investors voted against or withheld their vote on the new long-term incentive and share plans to replace LEAP. | On Wednesday, almost 18% of investors opposed the WPP directors' remuneration report. Almost 9% of votes were withheld, usually a sign that investors are protesting at a resolution. Almost 16% of WPP investors voted against or withheld their vote on the new long-term incentive and share plans to replace LEAP. |
| WPP's 2012 annual report revealed Sorrell received total remuneration of £17.6m last year, a 47.6% year-on-year increase over the £11.9m he earned in 2011. | WPP's 2012 annual report revealed Sorrell received total remuneration of £17.6m last year, a 47.6% year-on-year increase over the £11.9m he earned in 2011. |
| He received a base salary of £1.3m and a cash-and-shares bonus of almost £3.1m – 268% of his base pay – with the surge in total remuneration fuelled by an £11.4m award of WPP shares as part of LEAP. | He received a base salary of £1.3m and a cash-and-shares bonus of almost £3.1m – 268% of his base pay – with the surge in total remuneration fuelled by an £11.4m award of WPP shares as part of LEAP. |
| Some investors at the AGM, held at the Savoy hotel in London, remained unhappy at the level of Sorrell's pay. | Some investors at the AGM, held at the Savoy hotel in London, remained unhappy at the level of Sorrell's pay. |
| "Actions speak louder than words … the board and remuneration committee's actions on remuneration do not go far enough to address shareholder concerns over size of pay awards or indeed succession planning," said Deborah Gilshan, corporate governance counsel at WPP shareholder the UK Railways Pension Fund. | "Actions speak louder than words … the board and remuneration committee's actions on remuneration do not go far enough to address shareholder concerns over size of pay awards or indeed succession planning," said Deborah Gilshan, corporate governance counsel at WPP shareholder the UK Railways Pension Fund. |
| "[As an] appropriate solution to address shareholder concerns this is not a plan we can support," she added, calling on the company to "fully address pay and succession planning to make sure these issues don't continue to distract the board and shareholders". | "[As an] appropriate solution to address shareholder concerns this is not a plan we can support," she added, calling on the company to "fully address pay and succession planning to make sure these issues don't continue to distract the board and shareholders". |
| Speaking after the AGM vote on Wednesday, Sorrell struck a typically uncompromising note: "How many CEOs have an investment of £200m in their company, maybe that should be the question." | Speaking after the AGM vote on Wednesday, Sorrell struck a typically uncompromising note: "How many CEOs have an investment of £200m in their company, maybe that should be the question." |
| He added that 90% of his remuneration, and that of most key people in the company, was based on performance. "Over time people will see the impact of the changes in the compensation programme." | He added that 90% of his remuneration, and that of most key people in the company, was based on performance. "Over time people will see the impact of the changes in the compensation programme." |
| Jeffrey Rosen, the outgoing head of WPP's remuneration committee, said the new pay and incentive plans are a "fair and appropriate" balance of shareholder views and what Sorrell is worth. | Jeffrey Rosen, the outgoing head of WPP's remuneration committee, said the new pay and incentive plans are a "fair and appropriate" balance of shareholder views and what Sorrell is worth. |
| "We always tried to take full account of what I would describe as a diversity of views among shareholders we've consulted," he said. "Our attempt was to strike a balance between these views and a balance on what is fair and appropriate for the executives of this company and the chief executive. [It is] an appropriate level and an appropriate response." | "We always tried to take full account of what I would describe as a diversity of views among shareholders we've consulted," he said. "Our attempt was to strike a balance between these views and a balance on what is fair and appropriate for the executives of this company and the chief executive. [It is] an appropriate level and an appropriate response." |
| WPP chairman Philip Lader, who is leaving the role after 12 years at the end of 2014, added: "What we agree on is that pay must be [based] on performance." | WPP chairman Philip Lader, who is leaving the role after 12 years at the end of 2014, added: "What we agree on is that pay must be [based] on performance." |
| Lader also reminded investors that while they voted down Sorrell's pay last year, he only received what was due under plans that 80% of them had approved five years ago. | Lader also reminded investors that while they voted down Sorrell's pay last year, he only received what was due under plans that 80% of them had approved five years ago. |
| Inevitably the board was asked about plans for life after the 68-year-old Sorrell, who founded WPP in 1985, decides to step back from the business. | Inevitably the board was asked about plans for life after the 68-year-old Sorrell, who founded WPP in 1985, decides to step back from the business. |
| Sorrell said the company had a succession plan for both a "so called red bus situation" – that is, him falling under one – and the long term. | Sorrell said the company had a succession plan for both a "so called red bus situation" – that is, him falling under one – and the long term. |
| "[WPP] is my creation, I started it in 1985 ... I therefore feel it is in part, not totally, my creation," he added. "The person who succeeds me will do it differently, probably better. People wrote that we wouldn't survive Google, we wouldn't survive the recession. We're still here." | "[WPP] is my creation, I started it in 1985 ... I therefore feel it is in part, not totally, my creation," he added. "The person who succeeds me will do it differently, probably better. People wrote that we wouldn't survive Google, we wouldn't survive the recession. We're still here." |
| "Succession planning is an essential part of the responsibility of any corporate board," said Lader. "We take that very seriously. We believe Sir Martin Sorrell is the best person to lead this company at this time, but it is incumbent on us to be planning for continued leadership of the company. We have … an organisational structure that [means] not just one person manages the company. We take seriously, but confidentially, to do very regular and routine succession planning." | "Succession planning is an essential part of the responsibility of any corporate board," said Lader. "We take that very seriously. We believe Sir Martin Sorrell is the best person to lead this company at this time, but it is incumbent on us to be planning for continued leadership of the company. We have … an organisational structure that [means] not just one person manages the company. We take seriously, but confidentially, to do very regular and routine succession planning." |
| Some investors and advisory bodies remain unhappy with the state of affairs at WPP, with the Local Authority Pension Fund Forum, which represents 56 funds and controls up to 2% of the company's share, voting against Sorrell and his "excessive" pay. | Some investors and advisory bodies remain unhappy with the state of affairs at WPP, with the Local Authority Pension Fund Forum, which represents 56 funds and controls up to 2% of the company's share, voting against Sorrell and his "excessive" pay. |
| Pirc, the influential shareholder group, urged its clients to vote against the remuneration report and incentive plan. | Pirc, the influential shareholder group, urged its clients to vote against the remuneration report and incentive plan. |
| However, Institutional Shareholder Services, a consultancy that advises about 20% of WPP's shareholders, advised investors to back WPP. | However, Institutional Shareholder Services, a consultancy that advises about 20% of WPP's shareholders, advised investors to back WPP. |
| Shareholder advisory service the Association of British Insurers issued an "amber top" report on WPP. It flagged issues at WPP, including executive remuneration, but fell short of a "red top" report which would have caused many investors to vote against WPP's remuneration resolutions. | Shareholder advisory service the Association of British Insurers issued an "amber top" report on WPP. It flagged issues at WPP, including executive remuneration, but fell short of a "red top" report which would have caused many investors to vote against WPP's remuneration resolutions. |
| Last year, ISS and ABI issued reports against backing WPP. | Last year, ISS and ABI issued reports against backing WPP. |
| WPP first made the announcement about Lader, who last year suffered a minor backlash from investors who voted against his reappointment or withheld their vote in protest over his role in approving Sorrell's big paychecks, when the company published its annual report in April. | WPP first made the announcement about Lader, who last year suffered a minor backlash from investors who voted against his reappointment or withheld their vote in protest over his role in approving Sorrell's big paychecks, when the company published its annual report in April. |
| In the annual report, WPP said that Lader is also stepping down from WPP remuneration committee. | In the annual report, WPP said that Lader is also stepping down from WPP remuneration committee. |
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