'Only' 21% of WPP investors reject £48m Sorrell's pay deal
Over one fifth of WPP investors have rejected the £48m ($62m) pay package of the advertising company’s CEO, Sir Martin Sorrell. In total, 20.8% voted against the award, whilst 0.5% abstained. This was the lowest level of opposition to Sorrell’s pay, which was 32% lower than the £70.4m he received in 2015, since 2010. Last year, 34% of investors voted against Sorrell’s remuneration.
More than a fifth of WPP investors have voted against Sir Martin Sorrell’s £48m pay package, as the chief executive and his board faced a barrage of questions at the annual meeting over who will take over as head of the world’s largest advertising group.

A total of 21.3% of shareholders either voted against his pay or abstained, the lowest level of unrest over Sorrell’s pay since 2010; 20.79% voted against and about 0.5% abstained.

The vote against Sorrell’s pay – which was down 32% on the £70.4m he received in 2015, one of the biggest pay deals in UK corporate history – was smaller than last year’s 34%.

WPP has moved to significantly tighten Sorrell’s pay, which has seen him receive more than £210m in the past five years. In 2012, nearly 60% of investors rejected his pay packet, one of the biggest shareholder revolts.

“We are highly uncomfortable with the 2016 quantum, not least in light of our historic concerns about board composition and the remuneration committee’s apparent lack of vigour and stress-testing when the legacy plan was devised,” said Hans Christoph-Hirt of Hermes, which represents investors holding just over 1% of voting rights in WPP.

WPP has scrapped the controversial Leap scheme behind the huge payouts and implemented a more stringent policy, which it tightened further last month.

Just under 10% of investors voted against or failed to approve the new policy. The revised policy is expected to pay out about £19m a year, and a late revision will see it drop to potentially as low as £13m from 2021.

“We feel able to give qualified support to the proposed new remuneration policy,” said Christoph-Hirt. “Although we do remain uncomfortable with the plan’s leverage and therefore the opportunity for high pay.”

Sorrell pointed out that WPP’s top staff are on the same incentive pay scheme he is and that tightening the reward policy could impact the company’s performance.

“What happens to me personally cascades down inside the organisation,” he said, speaking after the annual meeting. “These were incentive plans that focussed people on performance. The more relevant question is whether the new plans achieve the same result for shareholders. Whether this is the best way. We will see, time will tell whether this is the best way to ensure we get the best results.”

He said the overwhelming approval of the new tighter remuneration policy “reflects a view that these are better plans from a governance point of view”.



In 2021, Sorrell, who has recently become a father again, will be 76. With the question of pay mostly dealt with, investors focused on the long-running issue of succession at WPP.

WPP shareholders and funds including Standard Life Investments, Royal London Asset Management, Hermes and the Local Authority Pension Fund Forum questioned the chairman, Roberto Quarta, about the plans for life after Sorrell.

Quarta, who is a year into his job at the helm of WPP, said succession planning had become even more focused and detailed over the past year. He said the board had meetings with key talent across the WPP group, as well as maintaining a “constantly refined list” of external candidates.

Christoph-Hirt said: “While we appreciate the steps that the company has taken so far, we urge the chair to continue to focus on the management of succession risks. Our engagement with WPP does not question whether Sir Martin is the right person to lead WPP but is about ensuring that the company’s success is appropriately safeguarded with an eventual succession proceeding smoothly.”

Deborah Gilshan, stewardship and governance director at Standard Life Investments, said: “[Succession] remains the key governance risk to our long term investment in WPP. As another annual meeting passes, the time to address succession for the chief executive shortens and the necessity to do so becomes more pressing.”

One quirk of Sorrell’s relationship with WPP is that his contract states that he or the company can terminate his service “at will”, rather than the more usual notice period of 12 months.

Standard Life Investments, which holds a 1.5% stake in WPP, challenged the board to force Sorrell to extend his notice period.

“Unusually, the CEO’s service contract may be terminated by either the company or Sir Martin without any notice,” said Gilshan. “Given this, we suggest the board consider what lead time would be required to ensure an orderly succession and discuss this with Sir Martin.

“We would like the board to come to an agreement with him that, other things being equal, he will provide sufficient warning to meet this timeframe. In our opinion, this increases the likelihood of a seamless succession as it would allow the board to execute their succession plans effectively and would reduce further the risk profile of the company.”