More than one fifth of WPP’s investors voted down a £43 million remuneration package for chief executive Sir Martin Sorrell at the company’s annual general meeting.
According to reports, WPP PLC shareholders approved Sorrell’s £43 million or US$66 million pay package for 2014, although this did not come without a revolt.
Sorrell’s pay package leapt 43% from £30 million the year before.
At the meeting, 77.8% voted for the pay package while 19.5% voted against and 2.7% abstained said The Wall Street Journal, adding that among most institutional shareholders of UK-listed companies, the default vote is usually cast in favour of management for remuneration reports.
“Abstentions are often viewed as a milder form of protest.”
This puts Sorrell as the highest-paid chief of a UK public firm, more than double the amount paid to the chief executive of Royal Dutch Shell.
One estimate has him being paid 179 times more than the average employee in WPP, added The Guardian.
Independent think tank High Pay Centre, which had a different view on the estimates, is another of those who have hit out at his remuneration. Deputy director Luke Hildyard said: “Sir Martin Sorrell has been a successful chief executive, but WPP apply that defence each year to increasingly provocative pay packages and it can only go so far.
“With Sorrell now paid over 1000 times as much as his average employee, they seem to have disregarded any interest in fairness or proportionality a long time ago.”
And a WPP spokesperson has responded to the comments: “Over 90% of Sir Martin Sorrell’s 2014 compensation was performance-related, the vast majority of which arose from the five-year co-investment scheme LEAP where he had to commit shares for five years.
“Given that WPP achieved total shareholder return of 171.5% over the period 2010-2014 when the FTSE 100 produced TSR of only 47% and also outperformed its competitors Omnicom and Publicis, the scheme produced a maximum match. And £19 million of the scheme award of £36 million was attributable to share price appreciation and dividends.”
However, while some industry watchers and shareholders may be in revolt, some of his employees may not agree.
One senior WPP agency lead in Asia told Marketing it was not a major issue.
“Let’s be honest, this company is his brainchild. If anyone deserves to be rewarded it should be him. There are schools of thought where the CEO cuts his pay to give benefits to staff, but I doubt the genuine intent of that – is that just for sensationalism?
“This is also part of what makes him successful as a businessman – he knows how to make money.”
Added Mike Langton, former lead for many network agencies across holding groups, including Interbrand, Momentum Worldwide, Carat, Wunderman, XM Asia and Bates 141: “A large part of his remuneration will be long-term incentives kicking in according to a formula pre-determined by the WPP board.
“He rode the globalisation horse spectacularly during that era. (For) digital a bit less so, but still better than most, except maybe Maurice Lévy (chief executive of Publicis).
“Is it all Martin? Not really. His lieutenants deserve recognition, but tend to be bright well-paid people who keep their heads down.
“Does he deserve the remuneration largess? Arguably yes, but that is really between the WPP board and shareholders. I think it’s all probably the last fireworks at the end of the party.”