WPP is scrambling to win over shareholders who rebelled over Sir Martin Sorrell’s pay packet last year, in a move that will see the chief executive of the world’s biggest advertising company take a cut to his base pay.
The company’s chairman, Philip Lader, is keen to avoid a repeat of last year’s revolt in which investors representing 60 per cent of shares voted against Sir Martin’s £6.8m pay packet.
This included a 30 per cent hike to his base pay to £1.3m, with the rest made up of bonuses and shares, as well as £459,000 in benefits. On top of the £6.8m he received £5.6m in equity as a result of a long-term share scheme. Although last June’s revolt was not binding, Sir Martin has since admitted that WPP “misjudged the mood of shareholders”. This year the board is in active discussions with key investors in an attempt to win approval before the company’s summer meeting. Some shareholders have been handed a proposal which they will give WPP feedback on before Sir Martin’s pay is announced in the company’s annual report.
“Since the last AGM, the board and the compensation committee have undertaken a thorough, confidential, consultation process with shareholders and that process remains ongoing,” a WPP spokesperson said.
Negotiations are likely to include a cut to Sir Martin’s base pay, with total compensation more dependent on performance.
WPP reported a seven per cent rise in pre-tax profits to £1.5bn for last year on a 3.5 per cent jump in sales to £10.4bn, and the company’s share price has risen by around 25 per cent in the last year. However, 2013 is unlikely to see similar growth due to the lack of big events such as the Olympic Games.