A majority of WPP shareholders voted in favor of company chief Martin Sorrell’s new remuneration package with 80.6 percent of them casting ballots to approve it. The vote at WPP’s annual meeting in London today comes after 60 percent of shareholders rejected his compensation scheme last year.
As a result, Sorrell—who earned almost $28 million last year—is now taking a $235,000 pay cut off his base salary of $2.03 million, a 20 percent reduction in potential bonuses and a replacement of WPP’s controversial long-term bonus plan, Leadership Equity Acquisition Plan (LEAP).
Sorrell still faces some backlash from investors. Almost 19 percent of WPP shareholders opposed his new compensation package while nearly 9 percent of votes were withheld. Almost 16 percent of shareholders, excluding withheld votes, were against the new long-term incentive LEAP substitute.
As a response to last year’s investor dissent, WPP is also making broad changes to the composition of its board and compensation committee. Non-executive director Jeffrey Rosen, the deputy chairman and managing director of Lazard, will continue to chair that committee through the end of the year. His replacement has yet to be announced and in WPP’s recently-issued 2012 annual report, the company said an outside successor has been chosen and agreed to serve but potential client conflicts could not be sufficiently cleared before today’s annual meeting. Board members, WPP chairman Philip Lader and outside director, digital investor and analyst Esther Dyson will retire from the compensation committee at the end of the year.
Shareholders also approved WPP’s nomination of four new outside board members today: Roger Agnelli, the former CEO of Vale and Bradespar; Dr. Jacques Aigrain, chairman of LCH Clearnet and the former CEO of Swiss RE Ltd. and J.P. Morgan Chase; Hugo Shong, president of International Data Group, China, and evp of IDG; and Sally Susman, evp of external affairs and communications for Pfizer Corp. Those individuals replace outgoing directors Lubna Olayan, Paul Spencer and Koichiro Naganuma, and professor John Quelch and Bud Morten, both of whom have served on the board for more than two decades.
At the annual meeting, WPP also reported that revenue for the first four months,rose 4 percent to $5.3 billion, with growth across all business practices except public relations and public affairs.
Advertising and media, branding and identity, healthcare and specialist communications like direct, digital and interactive were the strongest performers for the company, following a pattern from the final quarter of 2012 and first quarter of 2013. As was the case in 2012, WPP noted slower growth in mature markets like the U.S. and western Europe although the U.K. continues to grow strongly. The company’s revenue continues to be driven by its fastest-growing regions in Asia Pacific, Latin America, Africa and the Middle East and Central and Eastern Europe.
WPP reiterated earlier forecasts, saying it expects full-year revenue growth of more than 3 percent, with the company showing a “slightly stronger” second half.
Philip Lader, who said in April he will step down as chairman by the end of 2014, offered some thoughts about the current economic environment and its impact on WPP.
“Companies such as WPP, while finding length periods of economic downturn deeply painful, also have cause to be thankful for them,” he said. “In the minds of many in business and government, spending on marketing communications remains an almost discretionary activity to be undertaken when times are good but able to be cut, and cut without penalty, when times turn tough. But there is now a vast and growing body of evidence that spending on the building and maintenance of brands is as crucial and as valuable to a company’s long-term health as spending on the purchase and maintenance of capital equipment.”