WPP CEO, Sir Martin Sorrell has survived yet another revolt against his gigantic salary and bonus package, after over a quarter of the advertising giant's shareholders failed to back it at the company's annual general meeting yesterday, which took place at The Shard in London. Shareholders protested against the £30 million pay packet Sorrell received last year as CEO (the largest of any FTSE 100 leader), with votes cast before the meeting revealing that over 28% of the company's shareholders either rejected or abstained from approving the 2013 pay plan. This is a similar result to last year's non-binding vote, but a huge improvement over the group's embarrassing 2012 AGM, where 60% of the WPP shareholders rejected Sorrell's pay, which pushed the board into making shareholder appealing changes to its remuneration policy, cutting Sorrell's base salary by £150,000 and reducing potential bonuses. Sorrell appears to have survived by the skin of his teeth this year though, as the pay was approved, even though many shareholders continue to vent their frustrations regarding the group's executive pay arrangement. In 2013, the executive's pay was up by 70% from £17.54 million the previous year, but this included bonuses paid out under the old, now defunct plan. Mr Sorrell himself did not comment on his pay at the meeting.
82% of shareholders voted in favour of the pay policy and 18% voted against it
In the first binding vote on pay under new rules that give the company's shareholders a greater democracy when it comes to remuneration policy, 82% of shareholders voted in favour of the pay policy and 18% voted against it. The results from yesterday's AGM would appear to show that whilst there is certainly more harmony than there was 2 years ago, departing WPP chairman Philip Lader has done little to quell the rebellion.
Sir Martin Sorrell
Andrew Whiley, a representative of Pirc, the UK shareholder advisory group, says that there have been “Some considerable concessions about executive remuneration at WPP over the last few years but the company still maintains a complex assortment of pay arrangements." Lader defended the awards, saying that WPP “Admit complexity, but hope (shareholders) can see (WPP's) commitment to transparency.” When asked by a shareholder if the board would ever consider simplifying its pay scheme, however, Jeffrey Rosen, chairman of WPP's compensation committee, did admit that the board “Frequently” review this question.
This is a similar result to last year's non-binding vote, but a huge improvement over the group's embarrassing 2012 AGM
Lader also said it was his personal view that “It would be unfair if something that was put in place by 80% of the shareholders years ago and the arithmetic computation reaches a certain number, to turn to 12 of the senior executives and say ‘I’m sorry, but that is no longer applicable to you’. In fact that might even raise a legal issue.” Whilst this is a valid point, it would appear Lader is simply using rhetoric to legitimise overly complex salary and bonus packages that are (in the words of Local Authority Pension Fund Forum chairman Kieran Quinn), “Not justified by performance and are out of step with shareholder and community expectations of reasonable reward for effort”. WPP 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.
Benjamin Hiorns is a freelance writer and musician from the UK who is genuinely baffled by the obscene greed at the beating heart of big business.
