The world’s largest advertising agency group, WPP, has been criticised for awarding its chief executive Sir Martin Sorrell a “preposterous” pay package totaling as much as £70 million ($100.3 million) last year.
The Guardian reported WPP will announce later this week that Sorrell was awarded shares worth £60 million ($85.9 million) as part of a long-term bonus scheme in addition to his salary and annual bonuses. It means his total compensation since 2010 will reach more than £150 million ($215 million.)
Catherine Howarth, chief executive of ShareAction, a lobby group which promotes responsible investment, told Business Insider: “Anyone can see that a pay packet likely to reach £70m for a year’s work cannot possibly offer good value for shareholders. Executive pay has reached preposterous levels at many FTSE companies, but this year WPP has gone way beyond the pale. Last year there was a shareholder revolt over Sir Martin’s pay packet; the fact that the company has ignored protests by a considerable number of investors suggests a worrying disregard for their views.”
WPP emailed Business Insider this statement:
Sir Martin Sorrell’s remuneration for 2015 is not due to be disclosed until publication of the Annual Report at the end of April. The vast majority of the figure in the Annual Report will relate to a five year co-investment scheme which is wholly performance related and aligned with shareholders’ interests. This long term incentive award is due to be announced later this week and will reflect the fact that WPP’s shares have risen by 98% between 2011 and 2015 while the FTSE100 has risen by only 5.8%. Over the same period WPP’s dividends have been increased by over 150% and the market capitalisation has increased by over £10bn. The negative vote was in fact at WPP’s 2012 AGM and in response to that the Board held extensive consultation with shareholders before putting a new long term incentive scheme to shareholders which was approved at the 2013 AGM and which has come into effect for five year performance periods commencing 2013 and beyond.
Last year, WPP reported that Sorrell received a 43% pay rise year-on-year to £43 million ($66 million.) Just over 22% (19.5% against and 2.7% in abstentions) voted against Sorrell’s compensation package, fewer than the 28% who voted against his pay deal the previous year.
A ShareAction spokesperson said the group’s view is that any more than 20% of investors voting against a pay packet is considered a rebellion.
She added: “The point we would make is that despite several instances of shareholder disputes on pay over the years, WPP is ploughing on as usual, which is a worrying sign.”
At WPP’s annual general meeting last year, ShareAction representative Roger Geary said Sorrell’s compensation had reached an “astronomical level” at more than double the amount of the next best-paid FTSE 100 company CEO. He added that Sorrell’s pay presented a “significant risk to WPP’s reputation” to investors and the public and that the money could be better spent increasing investment in the company and its staff.
In response at the time, WPP’s former chairman Philip Lader said that 92% of Sorrell’s pay was variable and performance-based, over a period of five years. This plan was supported by 83% of shareholders when it was implemented, according to Lader, who added that Sorrell was also required to make a personal investment.
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