Wednesday 8 June 2016 12:35 pm

Sir Martin Sorrell given bloody nose over pay – but majority of shareholders still ok with £70m deal

I'm a reporter at City A.M., mainly covering law, professional services and banking

I'm a reporter at City A.M., mainly covering law, professional services and banking

WPP shareholders today told chief executive Sir Martin Sorrell that they were less than impressed with his £70m pay package, with 33.45 per cent choosing to vote against it.

Although the majority of investors still chose to wave through boardroom pay at the advertising giant, the proportion voting against is still up on last year, when some 20 per cent voted down pay.

The vote is also non-binding, meaning the Sorrell will have still taken home his £70.4m pay, including a £62.7m long-term bonus, regardless of the outcome. 

Prior to the AGM, a number of groups had spoken out to urge shareholders to vote against the pay deal, including the Local Authority Pension Fund Forum, ShareSoc and Pensions & Investment Research Consultants, which is better known as Pirc. 

Read more: There’s little logic to 2016’s shareholder revolts against executive pay

Speaking at the AGM, Euan Stirling, head of stewardship at Standard Life Investments, which holds just shy of 17m shares in the company, said it had voted against Sorrell's pay on the grounds that it suspected it was "more than would be required to recruit, retain or motivate even someone with the redoubtable talents of Sorrell".

Mike Fox, head of sustainable investments at Royal London Asset Management, explained that his firm had voted against the pay packet because "£62.7m of the overall £70m is due to the positive performance of the company’s shares compared to their peer group and this particular award system was closed in 2012.

"We are part of a collaborative engagement project with other large shareholders talking to WPP on issues such as pay, succession planning and other corporate governance arrangements."

Meanwhile, commenting ahead of the vote, Dr Hans-Christoph Hirt, co-head of Hermes EOS, said: "We are highly uncomfortable with the 2015 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."

Hermes EOS represents around 1.2 per cent of WPP shareholders. 

Perhaps preempting some anger from shareholders, WPP's annual report read: "While the value of Sir Martin Sorrell’s award is very large, it was the result of an outstanding set of returns to share owners."

Read more: Why revolts are not just for shareholders

Sorrell himself has previously come across as quite relaxed about the vote. In an interview with the Press Association in April, he said:

We have shareholder votes every year. It is what it is. Shareholders will decide. It's very democratic. We're always engaged with shareholders with anything and everything.

Sorrell is not the only chief executive to face the ire of the shareholders this AGM season. BP chief executive Bob Dudley saw his near £14m pay deal disapproved of in April, when 59.29 per cent of investors voted against the oil major's director's remuneration report