A couple of weeks ago, some of WPP’s top investors issued a “red top” alert over a proposed 30 percent increase in pay for the company’s CEO, Sir Martin Sorrell. Now, they’ve lowered the boom with 60 percent of investors voting “nay” on a proposed pay package at the company’s annual meeting in Dublin.
“The message from shareholders was unambiguous and cannot be ignored. It is now in the compensation committee’s gift to reach out to WPP’s leading shareholders to address their concerns and implement mutually acceptable pay policies and practices,” Guy Jubb, global head of governance & stewardship at Standard Life Investments, told the Financial Times.
In 2011, Sir Martin’s salary increased 30 percent to £1.3 million, with total pay increasing 60 percent to £6.8 million (about $10.6 million).
The outcome of the vote had been predicted in the days leading up to it, with some investors seeing a disconnect between the proposed pay and their return. Sir Martin maintains that he’s deserving of the ginormous paycheck because of the company’s advances (particularly in digital) despite the global economic recession. He thinks he’s another victim of the whole executive compensation uproar that has swept into the U.K.
While his pay is an issue, Sir Martin’s seat on the board is not. Nearly all (98 percent) of the shareholders voted for him to hang on to his seat.
We published a recent guest column on the IR’s role in the executive compensation issue. WPP’s remuneration committee has gotten push back on its proposed packages in the past. In a column for the Financial Times, Sir Martin says that the company is all about compensating “performance.” Sounds like it’s the size of that reward that’s become the problem.