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WPP in fresh shareholder revolt over 'excessive' pay Sir Martin Sorrell shrugs off revolt over £30m pay at WPP
(about 11 hours later)
Advertising giant WPP has clashed with angry shareholders as nearly 30 per cent failed to back the company’s “excessive” pay policy, including Sir Martin Sorrell’s £30 million package. The world’s top advertising mogul has shrugged off an investor revolt over his £30m pay. He claimed the Government would be happy if the shareholder vote in his favour  were a political election result and insisted that his pay could not be compared to that of other City bosses.
The rebellion is significant by City standards and shows departing chairman Philip Lader is still failing to mollify investors’ concerns, despite many years of protests. Sir Martin Sorrell, the best-paid chief executive in the FTSE 100, said it was wrong to “make comparisons” because he built his company, WPP, from scratch – unlike many other City bosses.
City sources estimated about 28 per cent of shareholders would fail to back the remuneration report at the annual meeting at The Shard by London Bridge. Twenty-eight per cent of shareholders failed to back the WPP remuneration report and nearly 27 per cent failed to back future remuneration policy – a big protest by City standards.
Leaving aside abstentions, around 18 per cent were set to oppose the £29.8 million package for Sorrell, the best-paid chief executive in the FTSE 100. A year ago, about 26 per cent did not endorse the remuneration report when he earned £17.5 million. A significant number of shareholders abstained to express their disapproval. Leaving aside those abstentions, 18 per cent opposed the remuneration report and 82 per cent were in favour at the annual meeting at The Shard near London Bridge.
WPP also held a vote on future remuneration policy under new City rules. About 18 per cent were expected to oppose and it is thought around a quarter will fail to back it. Sir Martin, 69, told The Independent: “I think that [the 82 per cent backing] would be a vote the Government would welcome if it were an EU referendum or Scottish devolution. I think it is sufficient.”
The opposition came despite WPP cutting Sorrell’s base salary by £150,000 to £1.15 million and reducing potential bonuses, after a whopping 60 per cent rejected the remuneration report in 2012. WPP, the world’s biggest ad group, argues that Sir Martin’s pay is fair because it is performance-based. Nearly £23m of his £29.8m package came from long-term bonuses. His base salary has been cut by £150,000 to £1.15m and potential bonuses reduced.
The Local Authority Pension Fund Forum, representing public-sector pension funds, voted against the future pay policy, which could still hand  £19.3 million to Sorrell for his work  in 2014. However, Keith Jago, a small shareholder, said: “I wonder how anyone can be worth £30m when the UK is debating our minimum wage levels? Martin’s hourly rate works out at £24,000 an hour – 3,700 times the minimum wage.”
LAPFF complained about the “overall complexity of variable pay arrangements” and claimed bonuses could have an “excessive quantum” worth “more than 1400 per cent of base salary”. The Local Authority Pension Fund Forum claimed WPP’s bonus scheme still has an “excessive quantum” worth “more than 1,400 per cent of base salary”. LAPFF also complained of “complex salary and bonus packages that are not justified by performance and are out of step with shareholder and community expectations”.
Kieran Quinn, chair of LAPFF, added WPP was seeking “complex salary  and bonus packages that are not  justified by performance and are out of step with shareholder and community expectations”. Sir Martin could still earn a maximum of £19.3m in 2014.
However, another past critic, US shareholder advisory group ISS, backed WPP on pay. The company argues it is right that most of Sorrell’s pay is performance-based. Last year, almost £23 million came in long-term bonuses that paid out after five years of rising profits. But Sorrell, who has led WPP since 1986,  has frequently clashed with investors over pay. This is just the latest revolt at WPP. Forty-two per cent failed to back the remuneration report in 2011 and 60 per cent opposed it in 2012. Even after the bonus scheme was reduced, 26 per cent failed to back the report a year ago.
“I find the controversy over my compensation deeply disturbing,” he declared in a defiant newspaper article in 2012, saying: “I am an owner and I act like one,” by investing in WPP shares. “It’s part of a continuum,” said Sir Martin, who claimed some critics failed to realise his bonuses have soared in value in part because of WPP’s rising share price.
WPP, owner of top agencies including Ogilvy & Mather and J Walter Thompson, will replace Lader as chairman later this year. John Hood has already been named as the new chair of the remuneration committee, after Jeffrey Rosen stepped down following a protest vote.   “You don’t go and analyse the investment I make in the company. You don’t analyse the impact and the movements in the share price – positively or negatively. You don’t analyse the fact that 100 per cent of my wealth is in this company. You just put that to one side and you make comparisons with other situations and say they are the same. But they aren’t.”
He suggested he was different from the majority of bosses of other listed companies. “When you found a company and you build a company, your attitude is different,” said Sir Martin, who has run WPP since 1986. “I’ve invested my money where my mouth is.”
The departing chairman, Philip Lader, prompted smiles when he insisted WPP was not overly reliant on Sir Martin and has a strong team. “It is an exaggeration to say the management of the company is 175,000 people reporting to an energetic fellow on a BlackBerry,” he said.
WPP has appointed a new head of its remuneration committee, John Hood.