WPP could face stormy annual general meeting as groups advise investors to oppose pay report

SportAccord - Day 4
WPP under pressure over Sorrell pay (Source: Getty)

WPP could face a rocky annual general meeting (AGM) next week after an influential shareholder advisory group said investors should vote down its pay report.

The report from advisory group Pirc said shareholders should vote against WPP’s remuneration report because of the “highly excessive” total variable pay for outgoing chief executive Sir Martin Sorrell, equivalent to 1,060 per cent of his salary.

Read more: WPP shares continue to drop as influential broker downgrades rating

Sorrell left the company in mysterious circumstances in April and has since revealed he will launch a new advertising venture, S4 Capital.

WPP said the high pay due to Sorrell was largely a result of the long-term incentive plan (ltip) he was entitled to under his employment contract, which was entered into in 2008, prior to the appointment of the present board.

Pirc also adviser shareholders to oppose WPP’s annual report for the lack of transparency around Sorrell’s exit in April after misconduct allegations.

Read more: Sir Martin Sorrell's mission: To out-fox former WPP allies

A WPP spokesperson said the company “had no option” but to keep quiet about the circumstances around Sorrell’s exit which they said were protected by data privacy law.

Fellow advisory group Glass Lewis also advised investors to vote against WPP’s pay report saying shareholders did not have enough information to know if Sorrell should be treated as a “good leaver”.

Read more: Sorrell gives update on how he plans to 'start again' after WPP

Pirc also opposed the re-appointment of Roberto Quarta as chair, as it said his role as chair of FTSE 100 firm Smith & Nephew would leave him overstretched. However, fellow advisory group Institutional Shareholder Services backed Quarta’s re-appointment, saying it is in the “best interests of shareholders to have continuity in the leadership of the board at this time”.

WPP’s board was advised by magic circle law firm Slaughter and May that Sorrell would be in breach of his contract if he shares any proprietary knowledge of WPP while putting together his new company.

If he does breach confidentiality clauses in his contract payments he is entitled to under his ltip could be suspended.

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