WPP investors reject chief executive's pay rise
THE “SHAREHOLDER spring” sweeping FTSE 100 companies arrived in Dublin yesterday, as investors in advertising giant WPP Plc voted against the pay packages of its directors, including chief executive Martin Sorrell.
In a rare move, almost 60 per cent of shareholders voted against the proposed remuneration, which included a 56 per cent increase for Mr Sorrell. Investor groups including ISS and Glass Lewis had urged shareholders to vote against the increase in Mr Sorrell’s pay package, which including long-term incentives was worth £11.6 million last year.
Almost 22 per cent of shareholders also voted against the re-election of Jeffrey Rosen, the WPP director who chaired its remuneration committee. Mr Rosen acknowledged that Mr Sorrell’s pay package “did not meet with overwhelming support”.
Although the vote is non-binding, WPP chairman Philip Lader told reporters at the annual general meeting in the Convention Centre Dublin that the board will now consult with shareholders on the issue of pay. He insisted that the board took the remuneration report “seriously” and that it “remains committed to paying for performance”, adding later that the board “appreciated the support manifest in the re-election of all the directors”.
Mr Sorrell, who was re-elected to the board with 98 per cent of investors’ support, said he was “disappointed” with the outcome, but indicated that he remained committed to WPP. “I’ve got £140 million riding on it,” he said, referring to his shareholdings. He claimed the shareholder advisory company ISS had not used fair comparisons when assessing the performance of WPP relative to its competitors in the advertising and media markets.
“It’s a democracy. The shareholders have spoken,” he said. “That’s their right and we obviously have to take that into account.”
Earlier, Louise Rouse, representing the organisation Fair Pensions, questioned why directors had not listened to shareholders “warning” protest vote last year, when 42 per cent of investors had rejected the pay report. Afterwards, Ms Rouse said it was “extraordinary” that the pay revolt had not been explicitly mentioned by either Mr Sorrell or Mr Lader during their presentations to shareholders on the performance of the company.
The board was “either incompetent or arrogant” to set itself on “a collision course” with shareholders, she added. She said that shareholders’ support for the re-election of Mr Sorrell to the board reflected the fact that shareholders’ objections related to pay rather than performance.
WPP moved its global headquarters to Dublin in protest at planned changes to the British tax system and to take advantage of Ireland’s low corporation tax rate.
British chancellor George Osborne has since indicated he will pass legislation that will remove the threat of double taxation on some of its earnings and allow it to switch its headquarters back to the UK.