It’s the Sorrell Show
Pay protests dismissed by swaggering WPP overlord
THERE is a big element of ritual to the WPP annual shareholder meeting. If the City had a season to rival Ascot and The Derby, this event, staged by the world’s largest marketing group, would compete with any spectator sport.
In a grand stateroom close to London’s Trafalgar Square, the company’s chief executive Sir Martin Sorrell struts around the stage with a swagger that comes from being the highest paid FTSE 100 boss.
As close to corporate royalty as you can get, the 70-year- old has ridden a coach and horses through what most observers deem to be acceptable levels of pay, triggering annual shareholder revolts.
There’s the £43m pay package, the £274,000 to take his wife around the world with him and a £50,000 accommodation allowance. When he is abroad, if he happens to stay in homes he owns – such as his flat in New York – he is recompensed for saving the firm on hotel expenses. This year was no different. In a bruising encounter, shareholders accounting for 22pc of those eligible to vote refused to back WPP’s pay report and one of the most powerful investors in Britain flew from Edinburgh to criticise the firm.
Guy Jubb, head of governance at Scottish giant Standard Life, which has a 1.7pc stake in WPP, went head-to-head with Sorrell, voting down the pay report
He said: ‘We have been concerned for some time by the perception that Sir Martin has the potential to dominate the board’s decision taking.’
DESPITE the worries, there’s no denying that Sorrell delivers the goods. Since 2001 revenues have grown from £4bn to £11.5bn, pretax profit has trebled from £500m to £1.5bn and the company has invested £8bn in 700 acquisitions.
The firm’s market value has also increased from £5bn in 2008 to £20.5bn.
The annual customs around the shareholder meeting involve behind-the-scenes manoeuvrings by investors in a vain attempt to rein in the corporate excess.
Then there’s the bad publicity from the fallout over the size of the reward.
It all culminates in the awkward gathering that throws the warring parties together.
Sorrell, who runs the business in the style of an owner-manager despite only holding 1.4pc in the firm, shuffles papers like a truculent schoolboy hauled into the headmaster’s study.
The captive audience is treated to an hour-long Sorrell show.
WPP is one of the few FTSE firms to wheel out excitable executives gushing about the business while functionaries wearing WPP name badges clap robotically, as if on autopilot.
Investors eventually get their moment to watch Sorrell and his henchmen wriggle when they are grilled on pay, value and who will take the helm when Sorrell stands down. And it was succession that was Jubb’s chief worry.
He said: ‘We have been concerned for some time by not only Sir Martin’s compensation arrangements, which – for the avoidance of doubt – we oppose, but also the lack of transparency associated with the board’s approach to dealing with what the chairman describes as the “succession elephant”.’
Outgoing chairman, former US ambassador Philip Lader, explained the succession process and why it has to be kept secret, replying: ‘You are entirely right to call for succession.
‘It might not be as transparent as you would like and I’m not going to apologise for that as it is part of a determined policy.’
Roger Jeary, a trustee of lobby group ShareAction, described the pay rise as astronomical: ‘I am concerned that this remuneration package does not offer value for shareholders.’
JEARY added: ‘ Moreover, this excessively large pay package poses a significant risk to WPP’s reputation among both investors and the public by the fact that thousands of people have emailed their pension funds protesting Mr Sorrel’s pay package.’
Investor Royal London Asset Management called time on the largesse ahead of the meeting.
But Sorrell still has his fans. One private shareholder said ‘Martin is worth every penny,’ calling on critics to sell the stock if they did not like the remuneration.
As Lader bid a tearful goodbye after 15 bumpy years at the helm, there is one constant in an uncertain world. Everyone will gather next year to watch Sorrell receive even more cash and fend off a fresh wave of investor protests.