‘Shareholder spring’ shock for Sorrell

WPP CE Martin Sorrell yesterday became the latest FTSE executive to be chastened by shareholders, 59,5% of whom opposed his pay rise at a meeting in Dublin.

A number of advisory groups and leading shareholders at WPP had criticised a proposed 60% increase in Mr Sorrell’s pay from last year, because it far exceeds the scale of returns enjoyed by investors.

Mr Sorrell, the second-highest paid executive on the FTSE 100, has argued that he deserves his £6,8m pay for turning WPP into one of the world’s leading advertising groups with more than 160 000 employees across 108 countries.

Chairman Philip Lader said after the vote that the board had exercised its best judgment when considering Mr Sorrell’s pay.

“We take the remuneration report vote seriously,” Mr Lader said. “We’ll consult with many share owners and we’ll then move forward in the best interest of our share owners and our business.”

The revolt — the latest attack on executive pay in what has become known as a “shareholder spring” — came as WPP said it had made a strong start to the year with operating profit both above budget and above last year’s level.

WPP made a strong start to the year, the world’s largest advertising group said yesterday.

This year “has started well with all geographies and sectors growing revenues,” Mr Lader said in a statement to shareholders at the Dublin meeting. “Operating profit is above budget and last year, and the increase in margin is in line with the group’s full-year margin target of 0,5 points improvement.”

Shares in the group were down 1% at 760p before the close. A number of advisory groups and leading shareholders, including research consultancy Pirc, said ahead of the vote they would oppose Mr Sorrell’s pay increase because it far exceeded the scale of returns enjoyed by investors. Pirc said its concerns were focused on “excessiveness”.

Scottish Widows Investment Partnership said after the vote it had opposed the pay rise because of the board’s decision to change prior agreements on executive pay, the Financial Times said yesterday.

Mr Sorrell also noted he has much of his personal wealth tied up in WPP in the form of a 1,4% stake worth more than £130m, and argued that his pay should be in line with CEs at other major media groups.

The pay rise issue comes after bosses at major British retailers such as J Sainsbury and Tesco took pay cuts, and follows a round of high profile shareholder revolts over executive pay at groups such as Barclays, Inmarsat and Prudential.

The “shareholder spring” has also led some executives such as Aviva boss Andrew Moss, and Sly Bailey, head of newspaper group Trinity Mirror, to resign. Reuters, Staff Writer